June 15, 2011
Obama's America: Prosperity LostBy Steve McCann
President Obama, the fellow leftists in his administration, and the Congress, nearly none of whom have ever made a viable contribution to the Gross Domestic Product, are hell-bent on seizing complete control of the economy. They are making the same foolish and arrogant mistake Marxists and Socialists have made since the mid-1800s, and the citizens of the United States will pay an overwhelming price for their folly unless the people begin to grasp the true cost to themselves and the country.
Those, such as Barack Obama, who believe they have a manifest destiny to rule and are faithful to socialist tenets, have a predisposition to control economic and personal activity through laws, regulations, taxes, and intimidation. They attempt to maintain this power by bribing the populace with massive social spending and promises in exchange for their votes. These commitments can never be fully honored; nonetheless those in power willfully keep the general public focused on blaming others for the failures of collectivist ideology and rely on the deliberately inept economic and civic education fostered at government operated schools to keep the majority of the people confused and bewildered.
As government grows and absorbs more and more of a nation's gross domestic product in order to finance this bribery, the less capital there will be for business expansion and job as well as wealth creation. Unfortunately many Americans do not understand that as a corollary to this activity, the standard of living and wealth of all citizens will continue to decline dramatically, as it is the private sector, not government, which creates prosperity.
Few things cause the eye to glaze over more than economic statistics, particularly when discussing incomprehensible sums in the trillions of dollars. But when it comes to the employment and wealth of Americans as well as the ability of the private sector to grow, there are two statistics that the public should be aware of, and one which everyone can relate to:
The Net GDP recognizes the impact of Federal, state, and local spending.
Ideally the Net GDP should increase every year adjusted for inflation. This would be an indicator of private wealth creation, higher personal incomes, and a healthy expanding economy, as money is more readily available for job creation. Despite minor ups and downs, the overall trend in a six to eight year period should always be on the positive side and normally has been over the past twenty-five years.
That is until the Obama years. The following table reveals what has happened since 2002 through the end of a potential second Obama term based on current and projected spending estimates -- a growth rate of 3.0% per year for the GDP was used. (Net GDP: inflation adjusted to 2002)
Sources: Government Accountability Office (http://www.gao.gov/htext/d11201sp.html)
US Government Spending: (http://www.usgovernmentspending.com/index.php)
Bureau of Labor Statistics: (http://www.bls.gov/home.htm)
Congressional Budget Office: (http://www.cbo.gov
Inflation Calculator: (http://usinflationcalculator.com)
The statistics for 2002 reflect the recession in 2001 and the devastating economic impact of September 11, 2001, yet the economy was able to recover very quickly due to pro-growth fiscal policies.
The impact of ObamaCare is reflected in the spending estimates after 2015. The primary drivers of the 2020 statistics are ObamaCare, Medicare, Social Security, and interest (as the national debt, per the GAO, will exceed 118% of the GDP). It is obvious to anyone not beholden to a rigid socialist ideology that there will be an ever decreasing amount of wealth in the private sector which will result in even less job creation and a further erosion in the individual standard of living, as the 2020 Net GDP shows a dramatic 28% drop over that of 2007.
If nothing is done, then by 2030 the Net GDP will fall by an unprecedented 54% as compared to 2007 and government spending as a per cent of the GDP will be 60.5%. The average citizen can certainly understand this impact on the nation by relating it to their personal lives: if their income or wealth dropped by 28 to 54% bankruptcy would be inevitable.
One of the factors in this massive decline of the net GDP will be population growth amounting to nearly 60 million people by 2030. That means that 40 million new jobs will have to be created to accommodate that increase plus recapturing the job losses to date of nearly 14 million; all the while not having the capital available to accelerate business growth. This country as it is known today will cease to exist and poverty will overtake the nation.
By comparison, Germany, which also has spending on a Federal, state, and local level, has taken a decided step back from its tax and spend policies as a strategy to overcome the 2008-2009 financial crash: Germany reduced spending as a per cent of GDP and focused on actions geared to expanding the private sector. The results (inflation adjusted to 2002):
Sources: CIA World Fact Book (http://www.cia.gov/library/publications/the-world-factbook/)
Index Mundi: (http://www.indexmundi.com/germany/unemployment_rate.html)
There can no longer be lip service to job creation and spending cuts as a reelection or election ploy. The nation must first evict Barack Obama and his accomplices from office, as their rigid ideology and narcissism prevent them from changing course or honestly admitting their mistakes. America must begin making the adjustments necessary to return to the Net GDP experienced in 2005-2007. To do so the country must either dramatically reduce spending; significantly increase the GDP rate of growth, or a reasonable combination of both.
Solely relying on spending cuts would be nearly impossible, as the level of decrease required would create many economic hardships, and sole reliance on GDP expansion would demand a yearly rate of growth of over 5.4%, which is not feasible without expenditure reductions. However, a consistent annual and achievable GDP growth rate of 4.25% coupled with a spending base line of 2008 plus 3.4% per year would enable the economy to realize the Net GDP growth experienced in the early part of the past decade by the year 2021 or sooner.
This program would entail the repeal of ObamaCare, changes in Medicare (per the Paul Ryan plan), minor eligibility changes in Social Security, significant reductions in miscellaneous government spending (except Defense), and wholesale elimination of duplicate and unnecessary agencies. The private sector can also be spurred on by dramatically eliminating costly and senseless regulations and laws as well as restructuring the tax code and rates. The country should also abandon its quixotic quest for "green" energy as a full-scale substitute for fossil fuels and begin a crash program to responsibly develop its vast carbon-based reserves.
The United States would then be the most attractive country in the world in which to do business. The growth of the GDP would be greatly accelerated and sustainable allowing the country to thrive well into the future.
It is not too late, but time is rapidly running out as the above table reflects. The American people must begin to educate themselves, understand the true nature of the dilemma at hand, and realize that Barack Obama and the Democrats are the problem not the solution.
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