A.J. DiCintio
Obama blasts hope into oblivion
By A.J. DiCintio
Coming on the heels of how the "stimulus" and healthcare "reform" bills were written and passed into law, last year's election revealed that huge numbers of Americans have figured out Obama's idea of change means transforming Washington into a place that's "beyond Boss Tweed" — because to fuel his repulsive machine, the political thug of old never even dreamed of spending and borrowing Obama style.
However, despite Obama's rabietic frothing-at-the-mouth-Keynesianism, there are a number of independent-minded citizens who think they hear a version of Emily Dickinson's "thing with feathers" singing to them that the president might yet experience an epiphany regarding the need for fiscal sanity in the nation's finances.
Sadly, the problem for those good folks is that with his 2012 budget proposal piled on top of the fiscally irresponsible behavior he exhibited during the two years preceding it, Barack Obama has blasted that songbird of hope into a bloody oblivion.
Here's the proof, starting from the beginning.
Obama never misses an opportunity to complain that in eight years G.W. Bush increased the debt 86% to $10.6 trillion because he believed the nation could afford, among other increased expenditures, a ten year trillion dollar expansion in Medicare drug benefits as well as two wars (that may eventually cost two trillion or more) without paying a penny toward the cost.
Now, although the president is correct to condemn Bush's unforgiveable nonchalance about debt, he maintains a meticulous silence about his insane deficit spending.
No, sir and ma'am, there have been no fiscal fireside chats from this president, proudly defending his wild liberal spending and telling the truth about the ravaging inflation, draconian tax increases, or both that lie ahead when the piper demands his due.
And no wonder, because Obama doesn't want the public focusing on the reality that in his first two years in office, federal indebtedness increased $3.5 trillion (from $10.6 to $14.1 trillion), making it a certainty that total federal debt will have increased 63% when his first term ends.
Neither does this self-professed "change agent" want Americans to think hard about the fact that each one of the $1.5 trillion annual deficits he himself projects over his first term equals the entire federal budget of 1995.
And he certainly doesn't want the public, millions of Democrats included, thinking about the implications of these facts:
From 1995 ($1.5 trillion) to 2010 ($3.5 trillion), the federal budget has increased 133% while GDP has gone up just 86%.
Yes, the federal government's insane profligacy reminds us of what's been going on in California, Illinois, New York, New Jersey, Wisconsin, and many other states — except that state politicians can't print money to support their great-great-great-grandchildren-robbing piggishness.
But what the president who told us everything we need to know about him when he titled his 2010 budget "A New Era of Responsibility" really, really doesn't want the public to focus on is his 2012 budget.
Why?
Because no amount of lofty sounding but empty Campaign Obama Rhetoric can hide the truth of his own projections that have federal debt increasing 50% over the next decade.
And because when citizens analyze his 2012 budget, they are certain to regard the 50% figure as a joke.
Actually, a shameless, insulting joke because rather than actually reducing the size of a government that has long been growing beyond its means and has exploded in size during his first two years in office, Obama proposes to achieve the "acceptable" 50% increase mainly by freezing some portions of the budget for five years — after which he proposes a return to Washington's dirty business as usual.
Moreover, Obama doesn't say a word about reforming Medicare to keep debt from exploding. But then he can't for two reasons: He hasn't proposed any solutions to Medicare's problems, and he is on record as saying that over the next ten years he intends to use $500 billion in Medicare "savings" (a number he pulled out of thin air) to help pay for his healthcare "reform" plan.
Neither does he speak a word about the true cost of "Obamacare," which every sensible person knows will come in at least double or perhaps triple the sick, cowardly, politically expedient $900 billion estimate he and congressional Democrats cooked up a la Ponzi.
And he has absolutely nothing to say about Social Security, which in 2016 begins paying out more than it takes in.
Of course, like other Democrats, Obama tells us not to worry, insisting the mythical Social Security Trust Fund (ask those under 45 how much they "trust" it) will simply begin cashing in the $2.5 trillion it holds in U.S. Government IOU's.
But, where, except through more ironic borrowing, is the Treasury going to get the money to pay those IOU's, given that Obama himself projects deficits as far as the eye can see?
(Ah, apparently the Liberal Church's "Free Lunch Doctrine" includes the belief you can spend a dollar (or 2.5 trillion dollars) twice.)
Finally, like a good true-believer, Obama is quieter than a church mouse regarding debt implications of fellow Keynesian Ben Bernanke's zero interest rate policy (ZIRP), which these days is allowing the U.S. government to finance its maniacally burgeoning debt on the cheap.
But people who know a thing or two about finances in the real world have a lot to say about what they see as a potential for disaster.
Here are the conclusions drawn by Kyle Bass (Hayman Capital Management) regarding what happens when interest rates rise as they eventually must:
"Every one percentage point move in the . . . cost of capital will end up costing $142 billion annually in interest alone. . . A move back to 5% short rates will increase annual US interest expense by almost $700 billion annually . . ."
Simple arithmetic tells us a moderate rise in short term interest rates will create severe problems for the federal balance sheet while a rise to 5% will produce a catastrophe.
Yet for fear of unleashing a tsunami of inflation, the Fed can't keep interest rates at zero indefinitely. That's why Bass calls ZIRP a "trap" likely to result in an ocean of socio-economic pain.
The facts now on the table, folks who hold out hope for a fiscally prudent Obama ought to join those of us who have already concluded a new president must occupy the Oval Office come January, 2013 — though all of us must keep an eye on the newcomer with the focused ferocity of a hawk; for to alter Ben Franklin's aphorism a bit, "A nation that lives upon hope in promises made by politicians will die fasting."
© A.J. DiCintio
February 26, 2011
Coming on the heels of how the "stimulus" and healthcare "reform" bills were written and passed into law, last year's election revealed that huge numbers of Americans have figured out Obama's idea of change means transforming Washington into a place that's "beyond Boss Tweed" — because to fuel his repulsive machine, the political thug of old never even dreamed of spending and borrowing Obama style.
However, despite Obama's rabietic frothing-at-the-mouth-Keynesianism, there are a number of independent-minded citizens who think they hear a version of Emily Dickinson's "thing with feathers" singing to them that the president might yet experience an epiphany regarding the need for fiscal sanity in the nation's finances.
Sadly, the problem for those good folks is that with his 2012 budget proposal piled on top of the fiscally irresponsible behavior he exhibited during the two years preceding it, Barack Obama has blasted that songbird of hope into a bloody oblivion.
Here's the proof, starting from the beginning.
Obama never misses an opportunity to complain that in eight years G.W. Bush increased the debt 86% to $10.6 trillion because he believed the nation could afford, among other increased expenditures, a ten year trillion dollar expansion in Medicare drug benefits as well as two wars (that may eventually cost two trillion or more) without paying a penny toward the cost.
Now, although the president is correct to condemn Bush's unforgiveable nonchalance about debt, he maintains a meticulous silence about his insane deficit spending.
No, sir and ma'am, there have been no fiscal fireside chats from this president, proudly defending his wild liberal spending and telling the truth about the ravaging inflation, draconian tax increases, or both that lie ahead when the piper demands his due.
And no wonder, because Obama doesn't want the public focusing on the reality that in his first two years in office, federal indebtedness increased $3.5 trillion (from $10.6 to $14.1 trillion), making it a certainty that total federal debt will have increased 63% when his first term ends.
Neither does this self-professed "change agent" want Americans to think hard about the fact that each one of the $1.5 trillion annual deficits he himself projects over his first term equals the entire federal budget of 1995.
And he certainly doesn't want the public, millions of Democrats included, thinking about the implications of these facts:
From 1995 ($1.5 trillion) to 2010 ($3.5 trillion), the federal budget has increased 133% while GDP has gone up just 86%.
Yes, the federal government's insane profligacy reminds us of what's been going on in California, Illinois, New York, New Jersey, Wisconsin, and many other states — except that state politicians can't print money to support their great-great-great-grandchildren-robbing piggishness.
But what the president who told us everything we need to know about him when he titled his 2010 budget "A New Era of Responsibility" really, really doesn't want the public to focus on is his 2012 budget.
Why?
Because no amount of lofty sounding but empty Campaign Obama Rhetoric can hide the truth of his own projections that have federal debt increasing 50% over the next decade.
And because when citizens analyze his 2012 budget, they are certain to regard the 50% figure as a joke.
Actually, a shameless, insulting joke because rather than actually reducing the size of a government that has long been growing beyond its means and has exploded in size during his first two years in office, Obama proposes to achieve the "acceptable" 50% increase mainly by freezing some portions of the budget for five years — after which he proposes a return to Washington's dirty business as usual.
Moreover, Obama doesn't say a word about reforming Medicare to keep debt from exploding. But then he can't for two reasons: He hasn't proposed any solutions to Medicare's problems, and he is on record as saying that over the next ten years he intends to use $500 billion in Medicare "savings" (a number he pulled out of thin air) to help pay for his healthcare "reform" plan.
Neither does he speak a word about the true cost of "Obamacare," which every sensible person knows will come in at least double or perhaps triple the sick, cowardly, politically expedient $900 billion estimate he and congressional Democrats cooked up a la Ponzi.
And he has absolutely nothing to say about Social Security, which in 2016 begins paying out more than it takes in.
Of course, like other Democrats, Obama tells us not to worry, insisting the mythical Social Security Trust Fund (ask those under 45 how much they "trust" it) will simply begin cashing in the $2.5 trillion it holds in U.S. Government IOU's.
But, where, except through more ironic borrowing, is the Treasury going to get the money to pay those IOU's, given that Obama himself projects deficits as far as the eye can see?
(Ah, apparently the Liberal Church's "Free Lunch Doctrine" includes the belief you can spend a dollar (or 2.5 trillion dollars) twice.)
Finally, like a good true-believer, Obama is quieter than a church mouse regarding debt implications of fellow Keynesian Ben Bernanke's zero interest rate policy (ZIRP), which these days is allowing the U.S. government to finance its maniacally burgeoning debt on the cheap.
But people who know a thing or two about finances in the real world have a lot to say about what they see as a potential for disaster.
Here are the conclusions drawn by Kyle Bass (Hayman Capital Management) regarding what happens when interest rates rise as they eventually must:
"Every one percentage point move in the . . . cost of capital will end up costing $142 billion annually in interest alone. . . A move back to 5% short rates will increase annual US interest expense by almost $700 billion annually . . ."
Simple arithmetic tells us a moderate rise in short term interest rates will create severe problems for the federal balance sheet while a rise to 5% will produce a catastrophe.
Yet for fear of unleashing a tsunami of inflation, the Fed can't keep interest rates at zero indefinitely. That's why Bass calls ZIRP a "trap" likely to result in an ocean of socio-economic pain.
The facts now on the table, folks who hold out hope for a fiscally prudent Obama ought to join those of us who have already concluded a new president must occupy the Oval Office come January, 2013 — though all of us must keep an eye on the newcomer with the focused ferocity of a hawk; for to alter Ben Franklin's aphorism a bit, "A nation that lives upon hope in promises made by politicians will die fasting."
© A.J. DiCintio
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