21 Apr
2011
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More than Dollars and Cents: What’s at Stake in the Budget Battle

The next political showdown will be one for the ages, and could very well determine the nature of American society for generations to come.

President Obama and his party have gone on a federal spending binge unlike the nation has ever seen (with the exception of World War II).  Republicans, in response, are rallying around the Paul Ryan budget, which would reduce the debt by $6 trillion over 10 years and not raise taxes.  President Obama’s to Ryan’s budget is unspecific, but claims to reduce the debt by $4 trillion, while raising taxes.

Consider that our economy is in a difficult conundrum.  Through intervention after intervention, we are painted into a corner of debt, inflation, unemployment, and – if the Democrats get their way – higher taxes across the board. The Democrat response to this quagmire is ostrich-like.  They say, in effect, what debt problem? If a debt problem is acknowledged, the narrative is that Obama will be fixing Bush’s debt by raising taxes “on the rich,” (which happens to include most small business and two income families).

Look at the facts: The Federal government has ratcheted up its annual budget almost $1 trillion in 4 years of Democrat Congresses. Total government consumption has risen from ~$2.8 trillion in 2007 to ~$3.6 trillion in 2011. Debt has increased at the fastest pace since WWII, a time when America was engaged in a total war effort. Our central bank is monetizing $100 billion in debt/month, and providing additional so-called liquidity to already stretched loan markets. Excess bank reserves are well over $1 trillion. A recovery would involve banks actually beginning to loan again (which they have not), and this measure would accelerate the already-seen rise in prices.  Food and fuel, two staples of life for every individual and family, are rising at a meteoric pace.

Meanwhile, Democrats, and especially our president, barely recognize the impending debt crisis.  The response to Ryan’s prudent, moderate, and eminently responsible has been to label Republicans “radicals” and “extremists.”  We know this because New York’s own Senator, Chuck Schumer, accidentally revealed himself last month, explaining that “the caucus” has instructed him to use the word “extremist” when talking about the Tea Party.  Last night, President Obama read off the Democrat newest script, calling the Republican budget “radical” and “not courageous,” not once but twice in his demagogic speech at Facebook.

Posing as the moderate, Obama claims that Ryan’s budget destroys Medicare and the safety net that has defined American “social policy” over the last 50 years.  He claims that Bush irresponsibly cut taxes and created the debt.  Raise taxes to Clinton era levels, and our debt will go away.

Sorry, this line of reasoning is wanting. There are simply not enough so-called “rich” to foot the outrageous bill.  It’s estimated that even if the government were to seize all assets of the “rich,” it would not even cover the $1.6 trillion 2011 deficit.  The plain truth is that Democrats are going to have to raise taxes across the board if they refuse reform entitlements. Contrary to Obama’s claims, Obamacare has accelerated their insolvency, not reduced costs.

Moreover, Rep. Ryan predicts that under Obama’s plan, the Federal government is on course to spend about $0.40 out of every $1.00.  This is a 100% rise in government spending from our historical level of $0.20/$1.00.  In other words, Federal tax revenues must double for Obama to meet his spending and debt obligations.  This will extinguish America’s civil society as we recognize it. It will represent a radical departure from our history; perhaps even more so than the New Deal.

Obama is aiming at permanent transformation into a post-American style government. He is emulating Europe, where bureaucrats dictate industrial policy, health policy, consumer standards, monetary policy, and just about everything else.  Europe as a region is facing its own fiscal crisis.  However, European governments are better equipped to deal with fractious citizens because of existing bureaucratic power.  Is national healthcare getting too pricey?  Then cut services.  The citizens will lose in court.  That, in a nut shell, is the “soft tyranny”: crisis after crisis, leading to more and more control, finally ending in fiscal disaster.

The majority of America is 100% opposed to this vision.  They understand that the seemingly plausible reason Obama gives for raising taxes – that we must finance our debt to avoid default – is the result of Obama’s reckless prior spending.  He went on a spending binge with the nation’s credit card, and is now using the crisis that he created to permanently increase the size of government.  This necessarily demands higher Federal taxes.

Obama is not managing an economy, budget, or constitutional government.  He is managing a transition from constitutionalism and limited government to omnipotent government.  Tea Party members, generally speaking, do not believe that our current debt situation is absolutely intractable. It can still be solved with prudent measures that preserve American society – e.g. Rep. Ryan’s budget proposal.  Our president is uninterested in solving the debt crisis.  It is not his priority.  As he has explained, he wants fundamental transformation.  To do that requires that we dispense with our governing traditions and our hallowed Constitution – that “charter of negative liberties” that he regularly ignores.

Obama has an idea in mind – a state with X number of enforced laws, with power to accomplish what he wills. He will tax and spend until that model is in place, giving him all the power he desires. If American debt is downgraded, as S&P recently warned, this is only a minor inconvenience, a signal to fire up the propaganda mills.  To paraphrase the great economist Ludwig von Mises, parliamentary control means control of the purse.  The government can only control what it can afford to enforce and command. Thus, an increase of government consumption of private sector resources all but guarantees that we will live with less freedom. Obama may avoid the final collapse of the dollar, but it will come with significant concessions, which is exactly the point. We have every reason to believe this is what he intends: a pretext for increased sacrifice by the individual in order to aggrandize the State.

Appendix: Is Obama healing the economy?

Unemployment: Bloomberg
“New applications for unemployment benefits in the U.S. fell less than forecast last week, indicating the labor market will take time to improve.”

Manufacturing: MarketWatch
“Philly Fed manufacturing slumps in April”

Country had  “Right Track”: Rasmussen
“22% Say U.S. Heading in Right Direction, Ties Lowest Level of Obama’s Presidency”

See also: Great Recession, Round 2

DISCLAIMER: This post and the contents thereof are the views of only the author identified immediately above and do not necessarily represent the views of the New York Young Republican Club (the "NYYRC"), its officers or its members. The NYYRC expressly disclaims responsibility for the contents thereof and by its charter documents may not, and does not, endorse any candidate for any office, except in a general election.

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