All Is Not Well

The first step to recovery is admitting that you have a problem.

Of course, that seems to be the one thing the Obama administration won’t do.

They’ve got Democratic water carriers from every part of the media waging a war of words against the GOP, trying desperately to shift the blame by resurrecting memes like “failed Bush policies” and “Party of No”. Treasury Secretary Timothy Geithner smiling his most reassuring smile, insisting the impending tax tsunami is no big deal, and that letting the Bush tax cuts expire won’t affect growth. Joe Biden has spent the summer busily circling the wagons ahead of the mid-terms, selling voters on the idea that their tax dollars haven’t been utterly wasted on stimulus spending.

The American people have long known that Obama’s economic policies were leading the country down the wrong path. Now with the release of Friday’s Mid Session Budget Review we have hard data backing us up.

The report predicts the federal government will borrow $.41 of every dollar it spends, fueling the largest budget deficit in American history; at $1.47 trillion, roughly 10% of the U.S. economy. With just the current spending programs already in place, the deficit will never fall below $698 billion, ultimately leaving a national debt of at least $18.5 trillion by 2020. Of course that’s assuming the economy will grow at a rate of 4% over the next few years, which it hasn’t done since 1997-2000 during the .com boom. Things just get worse from there.

Remember that when President Obama sold the $862 billion stimulus spending plan, it was on the strength of the claim that it would prevent unemployment from rising above 8%. Seeing that unemployment is currently 9.5%, it’s clear the administration was pulling that promise out of thin air. The expiring Bush tax cuts will increase taxes on the majority of small business owners, further weakening private sector job growth. Expect to see unemployment in excess of 8% until at least 2012.

So just what did we get for all of that stimulus money? Bigger government. The Bush/Obama stimulus plans drained funds from the most productive sectors of our economy, and increased federal spending, crowding out investment from private capital markets. The administration has consistently guarded the public sector from the same contraction affecting the rest of the economy, “saving and creating” government jobs, by taking money out of your pocket and mine to give a civil servant a paycheck. Obama’s economic advisers are telling him to go all in, to borrow and spend even more to try to shock this economy back to life. It’s a convoluted Keynesian nightmare threatening to sink any hope of recovery once and for all.

But we can stop it.

All we need to do to get America moving again is to remove the boot of government from the throats of the people, and allow the private sector to breathe again. Firms are flush with cash, and entrepreneurs are waiting with the knowledge to create and sustain growth for years to come. But to get the capital markets moving we’re going to have to send a very clear message that if they start spending money and hiring workers, they’re going to make money.

First, repeal the income tax and abolish the Internal Revenue Service, instituting a flat or fair tax system. Given that a repeal will be a long process, immediate extension of the Bush tax cuts will be necessary.

Second, drastically shrink the size of government by passing a Constitutional amendment mandating a balanced Federal budget, and that the rate of taxation be fixed in accordance with the first proposal. This will force balancing measures to come from spending cuts rather than higher taxes.

That’s it.

We’ll eventually have to deal with the mass of toxic government regulation of the private sector (Dodd-Frank and Obamacare spring immediately to mind), but much of that will come naturally as government is forced to tighten its belt. We must get hold of Congress and let them know these items are absolutely essential to the continued viability of our nation. Contact your representatives and instruct them to take action, or you will by voting them out.