President Obama is Responsible for Our Fiscal Mess
President Obama is responsible for our fiscal mess. I'm not exaggerating, and I'm not saying that simply because I think that Barack Obama is a terrible president, although I do think that he's an awful president. I'm saying that because the president has had ample opportunity over the past four years to arrive at a compromise solution to our immediate fiscal problem and then to make headway toward dealing with our longer-term fiscal issues, but he has failed miserably.
If the president had taken some of the advice of his own National Commission on Fiscal Responsibility and Reform, we wouldn't be counting the minutes before we fall off the fiscal cliff, but he didn't heed their warning two years ago. Even worse, he has given us no indication that he ever intends to take our nation's spending problem seriously.
The word "compromise" must not appear in Obama's dictionary. That fact has been obvious since Day One of his presidency. His first major initiative, Obamacare, was figuratively shoved down the throats of members of Congress, even members of his own party. It has been Obama's way or the highway since the beginning, and it's still his way. This time there will be a high price to pay.
Yesterday on "Meet the Press", the president told David Gregory that he cut spending by more than a trillion dollars in 2011. That's pure nonsense, but he got away with it because Gregory was too busy licking the president's shoes to do his job.
Anyone who believes that President Obama cut spending in 2011 needs to have his head examined, and spending continues to be the most serious fiscal problem that we face. That's what the Fiscal Responsibility Commission told the president. There is no way to solve our nation's fiscal problem without cutting spending, period. Stated another way, we can't tax our way out of this mess.
Pretending that increasing tax rates for millionaires and billionaires will do anything significant to solve our long-term fiscal problem is ridiculous. If millionaires and billionaires in the U.S. gave everything they own to the government and paid a 100% tax on their earnings, our spending problem would still be an imminent threat to our nation's fiscal solvency. In essence, that's what Chris Cox and Bill Archer said in an article for The Wall Street Journal in November:
As a result, fiscal policy discussions generally focus on current-year budget deficits, the accumulated national debt, and the relationships between these two items and gross domestic product. We most often hear about the alarming $15.96 trillion national debt (more than 100% of GDP), and the 2012 budget deficit of $1.1 trillion (6.97% of GDP). As dangerous as those numbers are, they do not begin to tell the story of the federal government's true liabilities.
The actual liabilities of the federal government-including Social Security, Medicare, and federal employees' future retirement benefits-already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.
If President Obama were serious about solving our fiscal problem, he would give lots of ground on spending, but as I said, he's not serious. Instead of dealing with the problem, he's playing politics as though he was running for re-election. And it's the worst kind of politics because he's playing the class warfare card and stoking a fire that has the potential to explode across the nation and produce results that I don't want to imagine.
According to a recent Gallup poll, the president's disapproval rating has climbed 5 points since Christmas. Maybe people are beginning to catch on, but doubt it. I fear that most of our fellow citizens believe that we can continue spending money we don't have on things we don't need and that everything will work out in the end. If I'm right, then responsible people should read Jon Hall's article in today's American Thinker carefully and begin to acquire precious metals.
Gold and other precious metals are hedges against inflation, but they are more than that. In times of emergency, they may be among the few currencies that have real purchasing power. I think that buying precious metals at this juncture is like buying insurance, because I'm fearful that we are moving headlong toward cataclysmic economic conditions brought on by pandering politicians like Barack Obama.
As the president likes to say, "Let me be perfectly clear," I hope we get a deal on the fiscal cliff mess by the end of the day, but even if we do, we still spend too much. Overspending and more specifically deficit spending threaten to bankrupt this nation. The result of loading more debt on top of an already debt-laden economy can be devastating. As far as I know, there is not a single example in history of a country abusing debt and not having to pay the price. Will we escape the inevitable this time and rewrite history? Don't bet on it.
Neil Snyder is the Ralph A. Beeton Professor Emeritus at the University of Virginia. His blog, SnyderTalk.com, is posted daily.