Obama's Power Grab

Since his reelection, President Obama has been clearly showing the country what he intends his next term to look like.  All of his cabinet picks have been a slap in the face to most Americans and our ally Israeli, he has threatened unilateral action via Executive Orders to get around the lack of Congressional support for his proposals, and he has pointedly refused to negotiate with Congress on the budget.  Not worried about facing another election, he is ready to impose his rule as King Obama.  Are we really going to let this happen?

The election was a travesty.  How did Republicans manage to lose?  I still can't believe that the GOP was not even able to get as many people out to vote for Romney as for McCain!  Obama's first term was a complete mess and he country is in a worse state now than when he took office.  There are fewer people employed today than at the height of the recession and the national debt is well over $16 trillion.  What does it take to get people to sit up and take notice?

Republicans need to do two things: first, they need to take the gloves off and start fighting dirty.  There's no way to win this country back by playing nice when the Democrats have no trouble lying about their records and intentions; second, we all need to come together and press the Republicans in Congress to fight every move Obama makes.  It is much more important for this country that they do not give in.  We have to give up sparring within the party and present a unified front before we reach the point of no return.  The things that tend to divide us, like social issues and illegal immigration need to take a back seat to the far more pressing issues of wasteful spending, entitlement reform and protecting the Constitution.  Look at the Democrats. Obama is appointing a cabinet full of white men.  Do you see women's or minority groups saying a word about it?  Not a peep.  We need to show the same unity, but with a principled cause, and push our party leaders to work together to do the will of the people.

The Stimulus Slide

A fiscal stimulus package is the gift that keeps on giving!  It provides 1) a temporary bump in GDP 2) an equivalent drop in GDP when it's over and 3) a further drop in GDP later as it's paid for by higher taxes or by increasing the debt.  That's why the Congressional Budget Office warned that the Obama stimulus would hurt the economy in the long run.  It is essentially a parachute adding drag to an already labored system. The greater the stimulus, the greater the effects - both positive and negative - with the negative effects outweighing the positive.  The effect is magnified when stimulus money goes outside of the American economy to other countries as much of the Obama stimulus did; we get a smaller bump but still pay the full boat.

Are we so willing to close our eyes to the fate of other big spending countries, or is it selfishness and the growing "what's in it for me" culture?  I think about the future impacts of today's runaway spending and wonder of we're going to follow in Greece's footsteps with unemployment over 25% and people rioting in the streets as the government imposes unavoidable austerity measures?  Unless we get spending under control to the point where we can actually cut the debt, we are well along that road.  

The Fiscal Cliff

I'm sure many are thinking today that with the election having gone their way, all with be right with the world and President Obama will be free to continue with the policies he promoted during his first term.  The split government, however, will make both the president's and the congreses jobs more difficult, as the last two years have demonstrated.  We live in an age of intense partisanship, where the opposing parties really do have fundamental differences in the way they see the country and the role of government.  Yesterday's election resulted in a second term for Obama and maintained Democratic control of the Senate, but the House remains firmly in control by the Republicans. 

The term "Fiscal Cliff" is used to refer to the set of economic circumstances we currently face as we near the end of 2012 with the Bush-era and 2011 temporary tax cuts set to expire, automatic cuts in entitlement programs agreed to as part of the debt ceiling negotiations ready to take effect, and new taxes kicking in as part of Obamacare.  It is unlikely the President and lame duck Congress will be able to work out a compromise in the next month to stave off the impending hit to business and households in 2013.  In all likelihood more temporary stop-gap measures will be put into place and will just serve to keep the country sluggishly marching in place and the economy as stagnant as it has been the last four years. It is worth noting that the President has yet to get a budget passed by a split congress and the Democratically led Senate has vowed to block Republican proposals that cut taxes or actual spending.  

The other "Fiscal Cliff" we face is the long-term crisis looming as we grow our National Debt to unsustainable levels with ever-increasing budget deficits.  President Obama is seemingly disinterested in or lacking understanding of the implications to the nation's future economic growth if the current trend is not reversed.  Of course, the effects are relatively long-term, rather than the immediate time horizon the president and his constituency look to.  While it was  hoped we could spend our way out of the current recession (a la the "stimulus"), we have seen that this does not work, sustainable jobs are not created and our National Debt has grown to $16 trillion - larger than GDP - the measure of overall production for the entire country.  

As the debt grows, interests rates increase on the debt as the risk of default grows.  Anyone remember Latin American countries defaulting on their national debt?  But can't we just grow the economy to pay it back?  As anyone with increasing levels of personal debt knows, a greater percentage of your income goes to servicing your debt, squeezing house hold spending.  As the nations debt increases, taxes need to be raised to cover the debt burden while domestic spending gets squeezed putting the brakes on the economy even further.  Contrary to popular belief promoted during the election, we could seize the entire income of the top 1%, or 5% for that matter, and still not make a dent in the debt!  This then becomes the future we are saddling our children and children's children with while we refuse to reign in spending and refuse to learn the lessons of history and spending our way out of trouble.