A false premise leads to false promises and false solutions

The results are now crystal clear. President Obama has released his record-shattering behemoth of a budget for 2012 that plans for $3.73 trillion in government spending. That’s another $1.65 trillion in deficit spending in just one year added to the $14 trillion in debt we already have. As one would expect, the White House spin machine is already in high gear. We will be under assault with claims of jobs, jobs, jobs.

When you have people in charge that are delusional, it shouldn’t surprise when they get the basic premise wrong. When you do that, everything that follows must also be wrong. The fact is that the administration has done nothing but lose jobs for two years with its policies. Even in a month which claims to show a small increase of private sector jobs, it hasn’t been enough to keep up with the population growth of our country which requires approximately 150,000 new jobs each month. This is to account for the birth rate as well as the immigration rate. These must be new jobs, not phony claims of jobs saved.

So they operate under a false premise that they are already creating  jobs and don’t wish to jeopardize it with excessive spending cuts. The solution? No spending cuts at all! They simply haven’t a shred of credibility when it comes to serious discussion about controlling deficits. And we haven’t even broached the subject of reducing the accumulated debt!

There are at least a couple of 800 pound gorillas in the room when Obama speaks on deficits. One is the debt interest. It has been kept artificially low through the manipulating of the Federal Reserve in keeping interest rates, otherwise known as bond yields, historically low. Even Timothy Geithner is now whispering in the Presidents ear that those interest rates are poised to triple by 2015 to over half a trillion and that is based on the 2011 budget. I should say the White House projected budget for 2011 as you may remember Congress never got around to actually passing one in order to hide from their voting record prior to the mid-term elections. So we still operate under a “continuing resolution” for now even though there are now less than 8 months remaining in this years budget.

The second gorilla in any budget discussion is war. These budget projections are made with the assumption that there won’t be any new conflicts in the next decade which will require us to blow out the budget even further. Naive to say the least, ignorance at best. Inexcusable under any circumstance. Granted, no one can predict what those future conflicts will be and thus budget projections are unknown, but that is the point. We know it will happen to some degree. This is why we must actually address our budget problems with real urgency right now. Instead, we still have Obama in la-la land pushing big government spending solutions to our economic problems. Completely irrational, yet completely expected.

We’ve already seen the GOP is not serious about it either. They can trumpet $100 billion in “cuts” as significant, but not in the relative world they aren’t. This is the standard double-talk they used to roast Obama for. When you are only reducing budget-busting excess spending, those aren’t cuts. Under the GOP plan, we would still be blowing out the budget, just less severely than the Obama plan. Real cuts would be below the balanced budget line spending less than the revenue taken in. The kind of cuts required to reduce the debt. Nobody is even touching on that subject other than lip service. The only discussion we’re having is who has a better plan to keep making the problem worse, only just a little less than the other side.

It’s like they are alcoholics that can’t admit they have a problem. They believe if they just switch from hard liquor to only beer, everything will be fine. Sorry boys and girls, you need to get on the wagon and go cold turkey.

So the basic premise is wrong. The entire discussion is centered on the wrong idea. Jobs are not being created. The deficit discussion shouldn’t even be on the table. It should be a given that any further deficit spending should be immediately stopped. The talk should be how do we address reducing our debt. Yet, most of us are suckers pure and simple. We’ll get caught up in the pointless debate over which side has a better plan when the truth is that neither side has presented a plan. Not a serious comprehensive one that addresses both deficit and debt reduction. Any symbolic “gains” in deficit reduction can and will be blown away with the next major terrorist event or foreign conflict we enter into. Neither side is accounting for that at all in their debate.

The only entity to “officially” discuss the real issues was the debt commission. Clearly, there was never any real intention of implementing their suggestions. We were never even able to get a consensus from a small group of politicians to approve their recommendations in committee, let alone get the full House and Senate on-board with something to send to Obama for him to veto back.

The reality is not good. When will we as Americans accept it? Particularly those on the right. They still hold out hope that the mid-terms made a real difference. Honestly, the discussions are at best on how to check Obama and neutralize his agenda. It’s not enough. This talk of having to start somewhere and steps in the right direction should have been the discussion from years, even decades ago. We’re well past that. The panic button needs to be pushed right now, not down the road.

I am not preaching all doom and gloom either. While we must do the obvious work of seriously cutting spending, balancing budgets and reducing debt, the real tool in solving all of the above problems is the economy and jobs. The way to minimize austerity and not simply raise taxes to attempt to solve the problem, which won’t work by the way, is to grow the economy. Private sector growth. New jobs that create wealth. It’s the key to it all and the only thing that will work. We must have private sector jobs that create new, real wealth. They can’t be subsidized by the taxpayer as any solution from Obama would entail.

The way to do it is so simple, yet virtually unreachable. Create the most irresistible environment for business in the entire world. Of course, low taxes and regulations are the main drivers to do this. Make it more expensive for businesses to conduct business elsewhere. Do that and they flock here from around the globe. Our tax revenues will vastly increase thus providing the means with which to address the debt. It’s so easy. Yet so hard. True free enterprise, pro-capitalist growth policies are not conducive to providing politicians with the power they seek. They simple can’t afford to have a self-sustaining system in which they aren’t necessary and are more of a hindrance than an asset.

In no way would this ever be easy because of these reasons. But we the people are the only ones that can make it happen. They’ll never do it on their own. The fact is, we aren’t nearly mad enough, in many cases educated enough, and overall simply not active enough to force them to do it. They may do the damage, but we must take the ultimate responsibility for allowing, even encouraging it with our ballots. Only we the people can now stop it.

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8 thoughts on “A false premise leads to false promises and false solutions”

  1. Another great post, 5etester. I long to see our government move to create an environment such as you suggest, yet any mention of corporate growth usually brings about a discussion of how greedy companies are. I can not remember a time when companies were held in such low esteem as they are today. One would think they are the devil incarnate.

  2. It’s just maddening. It isn’t as if we need new ideas on how to get it done. Growing the economy is really the easy part. We can only dream on just how great the rewards of capitalism would be without the albatross of government around its neck.

  3. Excellent post. Your first 800-pound gorilla (interest expense) is a central part of the premise behind my upcoming novel The Eagle Has Crashed. A quick back-of-the-envelope calculation shows that on approximately $10t in publicly held debt, a 1% increase in interest rates will erase $100b in spending cuts (although it will take some time for the full amount to materialize).

    Tha danger is that so much of our debt funded in realtively short-term notes (2 years or less), along with the massive amount of new debt we are issuing. Between the credit downgrade that I expect before the end of the year, plus the gradual removal of the U.S. dollar as the world’s reserve currency, I think we will be very lucky if our interest expense is “only” $500b in 2015.

  4. Thanks Ted. You can’t get that thing in print fast enough because the public is way behind the eight-ball on the urgency of it. I completely agree on the debt interest amount. If Geithner is going public with that projection, one can feel quite assured that it will be far worse.

  5. The book is in the hands of my editor for the final substantive edit, and then it will need a copy edit for spelling, grammar, punctuation, etc. The cover art is almost ready, which I will share with everyone before the book is published.

    It will come out first as an e-book to get it out there as quickly as possible. The print edition will follow as fast as possible.

    You’re right that it is an urgent subject. I started last year, and had hoped that there would be enough progress to take some of the urgency off of the subject. Sadly, the situation is worsening.

  6. True free enterprise, pro-capitalist growth policies are not conducive to providing politicians with the power they seek. They simple can’t afford to have a self-sustaining system in which they aren’t necessary and are more of a hindrance than an asset.

    You just nailed the crux of the problem in 2 sentences!

  7. Outstanding post 5etester. In my opinion there is very little difference in terms of core principles between two parties. They both seek to expand the role of government in our lives. One party just wants to get us to the point of complete government dependency at a faster pace. We need to wake and realize that the solution rest with the States. The States must unplug from this destructive path.

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