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The national debt, now stands at $12,300,000,000,000 and change, and it’s growing by the second. That’s about $40,000 for every American. More important, it represents $113,000 for each and every taxpayer.
The federal deficit in 2009, the amount we added to the nation’s credit card, was a record $1.4 trillion, which was our largest, as a share of our Gross Domestic Product, since the end of World War II.
The Congressional Budget Office predicts the deficit for 2010 will be $1.35 trillion and drop to $980 billion in 2011, which is based on the assumption that the Bush tax cuts, which ended the last recession, will be allowed to expire. In other words, taxes will be raised on almost everyone.
When this happens, it most certainly will have a depressing effect on the overall economy and will discourage job creation.
Nevertheless, based on the current numbers, the CBO is predicting that economic growth this year will be an anemic 2 percent with unemployment remaining in the 10.1 percent rage, easing slightly to 9.5 percent the following year. Loosely translated: more pain; little gain.
In his State of the Union speech last night, President Obama proposed a three-year freeze on domestic agency budgets. Bear in mind, this is after the 10 percent raise he gave them this year. It’s like shutting the door just after you’ve raided the refrigerator.
It is also important to understand that this freeze only affects the $477 billion of discretionary spending that must be approved by Congress each and every year. In reality, it represents only a tiny portion of the federal budget because Congress routinely creates “entitlements” for the things members consider to be important.
Now, when “we the people” hear the word “entitlement,” we immediately think about Social Security and Medicare, programs we have paid into – and we feel “entitled” to have that money returned. Nothing could be further from the truth. Although Social Security and Medicare are two of the largest entitlements, most entitlements simply represent the whims of the various members of Congress. New entitlement programs are set up each and every year. They are like individual spaceships that are put on automatic pilot and launched into the spending stratosphere.
The proposed freeze by President Obama is tantamount to taking a teaspoon of water out of the Atlantic Ocean.
CBO Director Douglas Elmendorf put it this way: “U.S. fiscal policy is on an unsustainable path to an extent that cannot be solved by minor tinkering.”
Under current law, if everything remains the same, the CBO’s new estimate states that the Treasury will need to borrow another $6 trillion between 2011 and 2020, and, believe it or not, that’s the really good news. Once the baseline is scrubbed of several unrealistic assumptions that Congress demands CBO use, the deficit returns to $1.4 trillion in 2010 and balloons to $1.9 trillion by 2020. Brian Riedl of the Heritage Foundation ran the numbers for us and came up with another $7 trillion in debt over the next decade or an additional $13 trillion in new red ink.
Last night, in his report to Congress, Obama threw out a few fig leafs to the middle class, promising easier repayment terms for student loans, tax credits for families who pay for day care or care for elderly relatives and, of course, more government programs to create jobs, jobs, jobs.
Meanwhile, the public seems to understand that the first $787 billion stimulus resulted in a net job loss and that most of the jobs that were saved or created were government jobs. Bigger government will not save us, never has and never will.
Last night, Obama accepted responsibility for failing to deliver swiftly on some of the changes he promised a year ago, but he never admitted that his priorities are out of step with the nation’s and have been counterproductive. For starters, the president needs a new Cabinet, one with a lot of real-world private-sector business experience.
Despite all the lofty rhetoric we just heard from the president, Barack Obama is viewed as a weak leader here and abroad. On Tuesday, the Democrat-controlled Senate voted down his proposal to create a bipartisan commission to reign in those out-of-control entitlement programs, even though the measure had more than enough Republicans on board to break a filibuster and get down to the question.
Internationally, the president had little success with his “apology tour.” However, the American people are forgiving. He could get the country back on the right track and save his presidency if he simply could admit he has been wrong and apologize to the people here at home.