Today the CBO released The Long-Term Budget Outlook. The projections are truly mind-numbing.Rather than bore you with numbers, take a look at the chart below. America is now a banana republic.
Incredibly, THESE PROJECTIONS DO NOT INCLUDE THE COST OF NATIONAL HEALTH CARE .
These numbers were prepared by the Congressional Budget Office (CBO) which is referred to as nonpartisan but never is. It’s Director and its composition are controlled whichever party holds the majority in Congress, in this case the Democrats. Historically, the CBO tends to underpredict spending, underpredict change, and underpredict the impact of taxpayer response to changes in tax rates. In other words, these projections are probably too low.
As the chart shows, World War I, the Great Depression, and even World War II, when the national debt briefly exceeded GDP, were just blips on the chart. The programs already on the books (so-called entitlements, including social security, Medicare, Medicaid), the recent money squandered on the bailout, and the massive increase in spending in the first Obama budget will increase the federal debt to about 4x the levels we have lived with in recent years.
The CBO’s conclusion is chilling:
Under current law, the federal budget is on an unsustainable path—meaning that federal debt will continue to grow much faster than the economy over the long run…
CBO’s long-term budget projections raise fundamental questions about economic sustainability…
It’s implication for tax rates is worse:
If spending grew as projected and taxes were raised in tandem, tax rates would have to reach levels never seen in the United States.
Read the last line again (it’s in the last paragraph on page xii in the CBO report.) “Tax rates would have to reach levels never seen in the United States.”
I have been paying close attention to the interplay of tax rates, government spending, budget deficits, the national debt, economic growth, employment, the stock market, interest rates and the dollar since my stint in the Reagan White House in 1981. Everything I have learned since then convinces me of one thing. The world envisioned in the CBO projections won’t work. Growth and employment would be lower. Inflation and interest rates would be higher. And the stock market and the dollar would crash.
Unless people start paying attention, raise their pitchforks, and say this has got to stop. Sadly, as I look out my window I don’t see any pitchforks.
Welcome to the new Banana Republic of America.
JR
We the People Still Have the Power
Americans can be pandered to with debates on C-SPAN or by watchdogs in the press. Political strategists can assure us the next election will secure our future. Meanwhile, the political class has learned to manipulate the average voter and bureaucrats have deeply imbedded control over our government.
Yet our founders envisioned even this occurrence and created a mechanism for the people and the States to reassert control over an overpowering federal government.
Article V of the Constitution states: “Congress … on the application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, …” But what should our State legislatures seek to amend?
The only way to stop the wasteful spending, and its eventual debilitating taxation, is to starve the government machine. To do this, we need a Constitutional Amendment to insure that:
1. Except in time of declared war against a foreign enemy, the federal government shall balance its budget. This budget shall include all cash expenditures and cash revenues for the federal government and all of its dependent agencies. Further, the total cash expenditures of the federal government shall not exceed eighteen percent (18%) of the prior year’s gross domestic product.
2. Included in the budget’s cash expenditures will be an annual payment to retire the national debt. This payment will be not less than 3% of the principal amount of the prior year’s national debt.
3. Any increase in taxes, fees, or other sources of revenue shall require a 2/3 vote of each chamber of Congress. All tax rates and fees as of January 1, 2010 will be re-established and be considered the baseline for any future changes.
4. No unfunded mandates or requirements shall be placed on state or local governments. The costs of all federal laws must be paid by the federal government and be included in the annual balanced budget.
Should the people decide they wish to spend more on certain items, they can petition their State or Local governments. Clearly, we cannot trust politicians. Unless specifically controlled, they will continue to use our money to buy votes for their own re-election. Encourage your state legislature to reassert its authority: call for a constitutional convention and pass these controls.
Please share with others.
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