Demos Keep Deficits Growing
July 28, 2016 at 4:25 p.m.
By Gary [email protected]
That's because I think deficits are a bad thing. And it doesn't matter who creates the deficits. I am not one of those people who gives politicians a pass for creating deficits based on their party affiliation.
I don't care if you're a Republican or a Democrat, running the government deeper and deeper into debt is a bad idea.[[In-content Ad]]There was plenty of deficit spending going on during the Bush administration. It drove me nuts. These guys are conservatives? They enacted huge new budget-busting federal programs.
President Bush's commitment to reduce government spending was largely a joke. He pushed more spending for farm subsidies, the military, a bail-out for the airlines and a brand new prescription drug benefit for older Americans - some of whom didn't really even need it.
Then there was the No Child Left Behind education program, the creation of the Department of Homeland Security and a couple of wars - Iraq and Afghanistan.
Certainly one could argue the merits of each of these things. But what one can't argue is that they were very costly and plunged the nation into debt.
Comes now President Obama with Democrats running the show in the House and Senate.
Katie, bar the door.
These guys are spending crazy amounts of money the government doesn't have and are proposing enormous budget busters like national health care, an energy cap and trade program and a new regulatory bureaucracy to oversee financial institutions.
Again, we could argue the merits of the programs. To me, that has become virtually irrelevant. What we should be arguing about is the dire straights we face if this whole budget deficit mess doesn't get under control.
Federal Reserve Chairman Ben Bernanke spoke a week or so ago. He said, according to Bloomberg News, large US budget deficits threaten financial stability and the government can't continue borrowing at the current rate to finance the shortfall.
"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth," Bernanke said.
"Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance."
And remember, this guy is trying to be optimistic. He weighs his words carefully because he doesn't want to risk causing anyone in the markets to feel antsy about investing.
But the truth is, there is a significant risk of relapse into financial abyss if the deficit problem isn't addressed.
The deficit already is influencing the the prices of long-term treasuries.
The Fed chief said that deficit concerns were already influencing the prices of long-term US treasuries.
And a cadre of economic analysts are saying the US may lose its top AAA credit rating by the end of 2010.
Standard & Poor's last month lowered its outlook on Britain, Reuters reported, threatening the UK's AAA rating.
The US faces the same risk because of swelling budget deficits.
If that happens, it makes US treasuries, the vehicle the government uses to fund all its massive debt, less attractive to prospective buyers.
So far, treasury auctions have gone pretty well, even though the government has flooded the market with treasuries this year. The downside is that yields have risen, meaning the government has to pay out more as the notes come due.
But if the US credit rating is downgraded, foreign governments will be less likely to fund our debt and that would be a huge problem for the US. It might even lead to a default.
That would lead to a sharp devaluation of the dollar and some pretty brutal inflation. When your dollar is worth less and what you want to buy costs more, it's not a good thing.
This is what's at risk, all because of this deficit insanity. And our elected leaders don't seem to get it.
Quite the contrary. The government is fixing to borrow $3 trillion to $4 trillion over the next two years. And you thought the lousy $1 trillion a year average over the last three years of Bush was bad?
Most economists and journalists are reaching the consensus that the deficit already is poised to cause interest rates to rise and weaken the dollar.
A weakened dollar drives up the price of foreign goods - like oil - and threatens to put pressure on what little recovery we may be experiencing.
All of this is causing President Obama's poll numbers to slip.
In a recent Gallup poll, 55 percent approved of his handling of the economy, 45 percent were OK with his handling of federal spending and 46 percent approved of his work on the deficit.
And, shockingly, a Rasmussen poll showed that voters now trust Republicans over Democrats to handle the economy. The count was 42 percent to 36 percent. Demos have won that question consistently over the last two years.
That same poll also showed voters by a 45 percent to 36 percent margin believe that President Obama should forego the rest of his stimulus spending.
Seems as if Americans are starting to sour on the notion of huge deficits and the government's attempt to spend our way back to prosperity.
So what's a President Obama to do?
Well, some of it may be out of his hands, especially if the unending treasury auctions fail to continue to attract buyers.
But let's say, for the sake of argument, that the government is able to raise all the money it wants.
President Obama still will be faced with some stark choices as he tries to service that massive debt, bring us national health care and a host of other programs, all while maintaining current and growing future levels of government expenditures on things like Social Security, Medicaid and Medicare.
He could raises taxes to try to fund his programs, but that would slow the economic recovery and cost him polling points. Lots of Americans at all income levels have had it with taxes and are wary of deficits.
He could print more money, but that would devalue the dollar.
He could have the Fed boost interest rates, but that would further stifle credit markets and weaken the dollar.
President Obama faces some daunting challenges, to be sure, but I worry.
I worry that the thing he should do is the thing he absolutely won't do - cut spending to the bone so government can stop spending money it doesn't have.
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That's because I think deficits are a bad thing. And it doesn't matter who creates the deficits. I am not one of those people who gives politicians a pass for creating deficits based on their party affiliation.
I don't care if you're a Republican or a Democrat, running the government deeper and deeper into debt is a bad idea.[[In-content Ad]]There was plenty of deficit spending going on during the Bush administration. It drove me nuts. These guys are conservatives? They enacted huge new budget-busting federal programs.
President Bush's commitment to reduce government spending was largely a joke. He pushed more spending for farm subsidies, the military, a bail-out for the airlines and a brand new prescription drug benefit for older Americans - some of whom didn't really even need it.
Then there was the No Child Left Behind education program, the creation of the Department of Homeland Security and a couple of wars - Iraq and Afghanistan.
Certainly one could argue the merits of each of these things. But what one can't argue is that they were very costly and plunged the nation into debt.
Comes now President Obama with Democrats running the show in the House and Senate.
Katie, bar the door.
These guys are spending crazy amounts of money the government doesn't have and are proposing enormous budget busters like national health care, an energy cap and trade program and a new regulatory bureaucracy to oversee financial institutions.
Again, we could argue the merits of the programs. To me, that has become virtually irrelevant. What we should be arguing about is the dire straights we face if this whole budget deficit mess doesn't get under control.
Federal Reserve Chairman Ben Bernanke spoke a week or so ago. He said, according to Bloomberg News, large US budget deficits threaten financial stability and the government can't continue borrowing at the current rate to finance the shortfall.
"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth," Bernanke said.
"Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance."
And remember, this guy is trying to be optimistic. He weighs his words carefully because he doesn't want to risk causing anyone in the markets to feel antsy about investing.
But the truth is, there is a significant risk of relapse into financial abyss if the deficit problem isn't addressed.
The deficit already is influencing the the prices of long-term treasuries.
The Fed chief said that deficit concerns were already influencing the prices of long-term US treasuries.
And a cadre of economic analysts are saying the US may lose its top AAA credit rating by the end of 2010.
Standard & Poor's last month lowered its outlook on Britain, Reuters reported, threatening the UK's AAA rating.
The US faces the same risk because of swelling budget deficits.
If that happens, it makes US treasuries, the vehicle the government uses to fund all its massive debt, less attractive to prospective buyers.
So far, treasury auctions have gone pretty well, even though the government has flooded the market with treasuries this year. The downside is that yields have risen, meaning the government has to pay out more as the notes come due.
But if the US credit rating is downgraded, foreign governments will be less likely to fund our debt and that would be a huge problem for the US. It might even lead to a default.
That would lead to a sharp devaluation of the dollar and some pretty brutal inflation. When your dollar is worth less and what you want to buy costs more, it's not a good thing.
This is what's at risk, all because of this deficit insanity. And our elected leaders don't seem to get it.
Quite the contrary. The government is fixing to borrow $3 trillion to $4 trillion over the next two years. And you thought the lousy $1 trillion a year average over the last three years of Bush was bad?
Most economists and journalists are reaching the consensus that the deficit already is poised to cause interest rates to rise and weaken the dollar.
A weakened dollar drives up the price of foreign goods - like oil - and threatens to put pressure on what little recovery we may be experiencing.
All of this is causing President Obama's poll numbers to slip.
In a recent Gallup poll, 55 percent approved of his handling of the economy, 45 percent were OK with his handling of federal spending and 46 percent approved of his work on the deficit.
And, shockingly, a Rasmussen poll showed that voters now trust Republicans over Democrats to handle the economy. The count was 42 percent to 36 percent. Demos have won that question consistently over the last two years.
That same poll also showed voters by a 45 percent to 36 percent margin believe that President Obama should forego the rest of his stimulus spending.
Seems as if Americans are starting to sour on the notion of huge deficits and the government's attempt to spend our way back to prosperity.
So what's a President Obama to do?
Well, some of it may be out of his hands, especially if the unending treasury auctions fail to continue to attract buyers.
But let's say, for the sake of argument, that the government is able to raise all the money it wants.
President Obama still will be faced with some stark choices as he tries to service that massive debt, bring us national health care and a host of other programs, all while maintaining current and growing future levels of government expenditures on things like Social Security, Medicaid and Medicare.
He could raises taxes to try to fund his programs, but that would slow the economic recovery and cost him polling points. Lots of Americans at all income levels have had it with taxes and are wary of deficits.
He could print more money, but that would devalue the dollar.
He could have the Fed boost interest rates, but that would further stifle credit markets and weaken the dollar.
President Obama faces some daunting challenges, to be sure, but I worry.
I worry that the thing he should do is the thing he absolutely won't do - cut spending to the bone so government can stop spending money it doesn't have.
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