Tag Archives: Federal Debt

CRAMNIBUS II – How Did It Happen Again?

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CRAMNIBUS II - Money

CRAMNIBUS II – More Long Term Federal Debt for Short Term Spending

For the second year in a row, the American people got stuck with a massive CRAMNIBUS Spending Bill to fund the Federal Government through another year. Spending more today, in exchange for more debt and interest costs later. The GOP bears full responsibility for this one, as they controlled both houses of the Congress for the entire year.

Sen Mitch McConnell campaigned in 2013 on restoring regular order. Republicans across the country fought tooth and nail working to return the Senate to the GOP, under the expectation that late night release; massive spending, surprise bills would be a thing of the past. So how did this happen again?

The answer lies in the “CRAMNIBUS II” itself. The bill nearly quadruples the number of H-2B visa workers admitted to the U.S. next year to about 250,000. Big money GOP donors and the Chamber of Commerce wanted immigration reform. McConnell and Behner knew that the American People were adamantly opposed increasing immigration. The only way to secure the visa increase was to bury it in a 2000+ page last minute bill.

There was time to avoid this, but McConnell and Behner intentionally ran out the clock. They let the legislative calendar slip, and kicked the can with a two month Continuing Resolution which funded the government through 11 Dec, the scheduled final day before the Senate went on recess. All was in place. The OMNIBUS itself wasnt released until the 11th hour, and hid the visa Trojan horse within 2000+ pages. The leadership created the crisis, and the American workers will pay the price.

Shame on McConnell, and shame on Paul Ryan for his complicity in the second CRAMNIBUS in as many years.

Eight CBO Forecasts On America’s Future

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Liberty loving Americans standing against reckless government spending.

Liberty loving Americans standing against reckless government spending.

In July, 2014 the Congressional Budget Office released its latest annual forecast on America’s economic future, “The 2014 Long Term Budget Outlook“.

Some key assumptions foretelling how high future interest rates will be on money the federal government, really the American tax payers, must pay are less than inspiring, in fact they are all bad news. These assumptions add to previous depressing CBO assumptions.

Per the CBO, four factors that will REDUCE future interest rates on $ borrowed by the Federal Government (the lower the better):

– The labor force is projected to grow much more slowly than in the past (1990-2007). (Slow labor growth means America’s ability to grow its tax base is weakened).
– The share of total income going to high income households will remain higher in the future (i.e. Fewer will share in the “American Dream”).
– Total factor productivity will grow slightly more slowly than in the past. (Less productive workers means less products and services).
– The risk-premium will probably remain higher than in the last few decades (i.e. Investors will find US Treasuries more attractive since they will be afraid of higher risk investments).

Per the CBO, four factors that will INCREASE future interest rates on $ borrowed by the Federal Government:

– Federal debt, unless things change, will be much larger relative to GDP than it was in the past. Click here for chart of America’s projected federal debt.
– Net inflows of capital will be less (i.e. There will be less foreign investment in the United States, which means less growth in businesses).
– The capital share of income will remain higher than historic averages (i.e. Those that have money to invest will keep more of the resulting income).
– The working population will get older, and have fewer people in their prime savings age (i.e. Less $ will be saved, and less $ will be available for investment).

This future isn’t set in stone, fixing it requires real leadership, a long-term commitment to smaller, less intrusive, and more effective government that stops excessive taxation of Americans. Upcoming posts will look at the details within CBO’s numbers.

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America’s Breaking Point?

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America Struggles Under Mounting Weight

America Struggles Under Mounting Weight

The recent flood of immigrants across America’s southern border is sparking heated discussions about what to do with the tens of thousands of children and other illegal immigrants swamping our border enforcement. Some say we should send them home, others say we should care for them, grant them amnesty, and welcome them as American citizens. The critical question that must be answered first is where is America’s breaking point?

Certainly the left would answer that the United States is the most powerful country on earth. Certainly we can care for a few tens of thousands or over time hundreds of thousands but starving helpless children. Taken as an isolated problem, the answer is of course yes, America could afford to care for them. The problem is, that this is not an isolated problem. Deciding to care for hundreds of thousands of new indigents is not America’s only burden. Collectively, they are becoming insurmountable.

This discussion requires an analogy to bring it into focus. Michael Phelps is the most decorated athlete in the history of Olympic sports. He currently has a total of 22 Olympic medals: 18 gold, 2 silver, and 2 bronze. His strength power and speed in the pool is legendary.

Let’s take Michael Phelps and say that he was in a lake surrounded by people struggling to stay afloat. Each one of them was carrying a small weight some the size of the BB, others a small rock, and still others weighing several pounds. In order to save their lives let us assume that Michael Phelps began to take on their burdens. From some he would take a BB, and the impact would be nearly unnoticeable at first. His ability to swim to the next struggling person and take on their weight unhampered. As Michael moved from drowning person to drowning person one can see a time when he would shift from being the rescuer to being in danger of drowning himself. At some point the weights that Michael Phelps would be forced to carry would drag under the greatest swimmer in the history of mankind.

This analogy is meant to show what many don’t understand. America does have limits. How many burdens can we take on before like Michael Phelps we would succumb to their combined weight and sink below the surface? America is $17.6 trillion in debt and climbing. The “War on Poverty” has cost the American tax payers $22 trillion so far. We’ve gone from adding BBs every year to adding large rocks as the weight of the interest on that debt mounts. Every month the percentage of people working in this country, acting as Michael Phelps, declines. Regulations, terrible burdens on businesses of all sizes, pour from nearly every federal agency. Obama care alone is responsible for tens of thousands of pages of regulations. America’s social safety net is at the point of collapse adding even more weight to a crop and economy struggling to stay afloat. The world is becoming ever more dangerous with a resurgent Russia, aggressive China, and spread of radical Islam. With all of these burdens, the cumulative affect of adding hundreds of thousands of more illegal immigrants to this country comes into focus. Where is America’s breaking point? All American’s should be frightened to face this question. America is the greatest force for freedom in the history of mankind, and yet now we must question how long she can stay afloat?

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Behind the Curtain – Total US National Debt

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Projected US National Debt Based Upon Current Rates Of Spending

Projected US National Debt Based Upon Current Rates Of Spending

This graph tells a very scary story, and complements my last blog, “Global Warming vs the National Debt”, which compares the hoax of Man Made Global Warming with the stark reality of America’s National Debt. The data was derived from the White House’s own data (OMB supporting tables) from the “2013 Long Range Budget Outlook“.

The first critical element of this chart, which shows constant year 2013 dollars, provides a look at TOTAL US Debt, not oneobscured by debt to GDP ratios. As bad as the gap between the two lines looks, it is most likely optimistic. OMB data assumes a constant 3% interest rate on America’s debt, basically forever. The more that America borrows, however, the greater the risk that our credit rating will get downgraded again, and force those rates up. Just a small increase would be devastating. America also faces the real risk that it becomes a bad credit risk. Nobody knows when that will happen, but every year that we stay on this clearly unsustainable path, increases the odds that America hits the borrowing cliff.

The chart’s second critical element is the decreasing number of years needed to add $10 Trillion blocks to the debt. Each $10 Trillion takes considerably less time to accumulate and is proof of how dire America’s fiscal situation is. Spread the word, pass this chart around, elect fiscal conservatives to Congress, and hound your representatives to balance the budget. Time is running out!

 

Global Warming vs The National Debt

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Weatherman Al Roker interviewed President Obama on Tuesday in response to the recently released National Climate Assessment Report. During the interview Obama said

“But the truth of the matter is that if we don’t do more, we’re going to have bigger problems, more risk of … extreme weather events that can result in people losing their lives or losing their properties or businesses. And we’ve got to have the public understand this is an issue that is going to impact our kids and our grandkids unless we do something about it.”

It’s a real tragedy that he is so fixated on global warming when he should make precisely the same warning about our national debt. Let’s look at the reality of the mounting debt, as opposed to the invented 100 year global warming crisis.

1. “If we don’t do more, we’re going to have bigger problems.”

Yes Mr. President, you got that right. In a few short years at your current rate of dangerous spending, debt interest payments alone will exceed a Trillion dollars each year. That’s far greater than the defense budget, and billions of that interest will go to China, so that they can build up their military as we dismantle ours.

2. “Events that can result in people losing their lives or losing their properties or businesses.”

Right again Mr. President. The massive debt will result in rapidly rising interest rates, and is unsustainable according to the Congressional Budget Office. Businesses will go under, and Americans will lose their jobs, properties and homes when they can’t pay their mortgages due runaway interest rates and rampant inflation bound to come. Long before the ocean swallows New York City, our debt will swallow America.

3. “And we’ve got to have the public understand this is an issue that is going to impact our kids and our grandkids unless we do something about it.”

Mr. President, no more accurate statement could be made than that we are foisting an impossible debt burden upon our kids and our grandkids. Their future America will be crippled by the excessive spending you, your administration and reckless Democrats and Republicans created. You will go down in history as the greatest debt creator in all of human history.

Given his statement on saving American’s future, however wrong global warming is, it’s clear that President Obama can think strategically, with an eye on the future. Why, why, why then can’t he use the same foresight to address our debt? Why aren’t there democrats screaming with a global warming-like fervor to stop the destruction of our economy? Why indeed?

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Frightening CBO Forecasts from THE BUDGET AND ECONOMIC OUTLOOK: 2014 TO 2024

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The following quotes were taken from the CBO’s own report, found here. They tell the very frightening story that if our country doesn’t change the fiscal path that it’s on under the Democrat’s tax and spend policies, our country is headed for a disaster. We need to stand up, get vocal, vote out the spenders and force our elected officials to balance the federal budget, before the mounting trillions that we owe dooms us!

  • “Beyond 2017, CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades.”
  • “Such large and growing federal debt could have serious negative consequences, including eventually increasing the risk of a fiscal crisis (in which investors would demand high interest rates to buy the government’s debt).”
  • “Interest rates on Treasury securities, which have been exceptionally low since the recession, are projected to increase in the next few years as the economy strengthens”
  • “Deficits Are Projected to Decline Through 2015 but Rise Thereafter, Further Boosting Federal Debt”
  • “In addition, changes in people’s economic incentives caused by federal tax and spending policies set in current law are expected to keep hours worked and potential output during the next 10 years lower than they would be otherwise.”
  • “Over the next decade, debt held by the public will be significantly greater relative to GDP than at any time since just after World War II. With debt so large, federal spending on interest payments will increase substantially”

In the below chart, also from the OMB report, note that the discretionary items in the budget get squashed by mandatory spending of interest, social security, and major health programs.

OMB Figure 1-2

OMB Figure 1-2