No matter who becomes president in November, he’s going to be confronted with a huge fiscal storm that no levee or dam will be able to hold back the flood waters of an insurmountable and unfathomable debt.
In his review of Dinesh D’Souza’s film 2016: Obama’s America, Dr. Gary North notes that there are at least three important topics that the film does not address. One of them is the real deficit that no one wants to talk about.
First, the deficit is vastly worse than the movie portrays. The movie sticks with the non-issue: the on-budget debt of $15 trillion [now $16 trillion], which is chump change, while never mentioning the central problem: the $222 trillion present value of the unfunded liabilities of the off-budget deficit, meaning the deficits of politically sacrosanct Social Security and Medicare. This is the heart of the federal government’s highly entertaining Punch and Judy show over the deficit, with Paul Ryan as Punch and Obama cross-dressing as Judy.
The off-budget deficit problem is not new. Every four years, the newly elected president and Congress kick the fiscal can down the road. They don’t want to be stuck with the can. In the not too distant future, the road’s going to end with a brick wall.
While presidents bear some responsibility for the deficit crisis, spending bills originate in Congress. The President proposes, but the Congress disposes. Congress could say no to every spending bill proposed by the President, but it (mostly) chooses not to. Every congressman knows that spending bills buy votes. Bought votes keep them in office.
Some future generation will get the bill. Congress hopes that they can stay in office just long enough so they won’t get blamed for the fiscal crisis that is inevitable.
Dr. North goes to argue that there is a third player in the monetary shell game that almost never comes under scrutiny — the privately owned Federal Reserve:
Ron Paul always was right for 36 years in not pointing to the President as the main economic problem, but rather the Federal Reserve System. So, any documentary that does not go after the Federal Reserve when it talks about economic problems, but blames the President instead, and also ignores Congress, is doing the general public an enormous disservice. It keeps the Federal Reserve in the background in the thinking of the viewers, when the Federal Reserve ought to be in the foreground, with the presidency in the background. This is basic economics. D’Souza does not know what he is talking about with respect to economics.
The Democrats scream that trimming spending by $2 trillion over ten years is “draconian.” Republicans imply that a $200 billion cut each year for ten years will get us back on track. They’re both wrong since the interest alone for the ten-year period will be in the trillions in addition to proposals for new spending and automatic increases.
Democrats want to convince voters that taxing the rich will fix the deficit problem. It won’t make a dent in it. All it will do is plunge us further into recession. Establishment Republicans are fearful in telling the truth about the deficit and the systemic changes that are needed because they will be voted out of office.
It’s going to take strong leadership and a willing public to take the needed medicine.