Financial challenges facing the US

A very interesting story from the NY Times about the crisis looming ahead thanks to the Bush / Obama economic recovery plan.

http://www.nytimes.com/2009/11/23/business/23rates.html?th&emc=th

Essentially, the Bush / Obama economic recovery plan is a lot like taking out an adjustable rate mortgage with really low teaser interest rates. When interest rates go up, the Federal government is going to be slammed. The NY Times - not what I'd call a conservative news outlet - article has a quote estimating that interest payments on the money we've borrowed will be as much as $700 billion per year in the future. That is as much as we spent this year on the economic stimulus bill and we will be paying that each year.

Now, just to review, what is Bush / Obama economic recovery plan? It involves spending lots and lots of money that the Government does not have including:

Economic stimulus - $400 billion under President Bush if I recall correctly, repeated by President Obama at a higher level ($700+ billion)
Bail out AIG - started by President Bush, continued by President Obama
Bail out big banks and Wall Street - started by President Bush, continued by President Obama
Bail out GM and Chrysler - started by President Bush, continued by President Obama
Continue Fed policy of giving money away free without any improvement in lending by banks or increase in jobs - started by President Bush, continued by President Obama
Continue shifting bad mortgages from the private sector into Government programs like Fannie Mae, Freddie Mac and now FHA with the private sector making big profits - started by President Bush, continued by President Obama

I can't resist making at least one partisan comment - didn't Candidate Obama say he was the person who would NOT continue the policies of President Bush?

Now the solution is going to have be creating a surplus in the Federal Budget that can be used to reduce the National Debt. This can be done by stimulating the economy to create more revenue - we're not seeing any of that happen yet; reducing federal spending - some reductions can occur if we actually get out of Iraq and don't replace that spending on Afghanistan; raising taxes - already planned (see next paragraph) and this retards economic growth; or some combination of these.

Raising taxes may not be a good solution because there are a number of tax increases already planned. These include a hidden tax on energy to pay for the "Cap and Trade program," taxes on health insurance that raise the cost of health insurance so we can provide subsidies so people can afford health insurance (I don't understand that logic either), and higher payroll taxes to pay for the anticipated skyrocketing Medicare costs to take care of the Baby Boomer generation.

Plus there are more government bailouts pending in the near future. It won't be long before we have to bail out the FHA, just like we did Fannie Mae and Freddie Mac, when the bad mortgages being shifted to that agency cause it to ask Congress for money. We may also need to bail out the government run Pension Benefit Fund that is insuring the pension funds that many major corporations, like United Airways, dumped onto that government program.

The Biden Administration blew it on Covid

It's about a year now since Joe Biden was sworn in as President and we can see the Biden Administration has handled the Coronavirus situation horribly. The Administration had a fantastic opportunity to declare victory early in 2021 and put this behind us. But they chose not to do that. The Biden Administration dropped the ball on pursuing the things America needs to put Covid in the rear view mirror while offering a message of fear and dictatorial mandates, and wedding themselves to a bureaucrat who declared that he is the science. The result was more Covid 19 deaths in 2021 than in 2020, strong disagreement and a loss of public confidence in the measures promoted by the Biden Administration, none of which is good for America. But it didn't have to be this way. The Biden Administration took office with three different vaccines available to issue to the public and almost 1 million people getting the jab every day. Shortly after taking office, Congress passed a Covid relie

Republicans shouldn't get cocky

Is there anyone who doesn't think the Republicans will retake control of both the U.S. House and Senate this year? Probably not - and that's the problem. All the polls we see are generic. They are asking questions about how people feel about the parties. The pollsters are asking would a generic Republican defeat a generic Democrat. Other polls are gauging people's feelings toward President Biden. Every indication is the Republicans will win big in both Houses of Congress. What could go wrong? Elections are not generic. Incumbents are not easy to unseat. Furthermore, elections involve Candidate A running against Candidate B in specific districts on specific issues. Candidates and parties also need money to run campaigns. Republicans can be facing an uphill fight on some or all of these points. Take incumbency - in Georgia a recent poll showed Herschel Walker running only a couple of points ahead of Democrat incumbent Senator Raphael Warnock. These poll results a

Inflation stays until Biden and the Democrats go

We won't put inflation behind us as long as Joe Biden is President and Democrats control one or both Houses of Congress. There was going to be some level of inflation after the shutdowns of 2020, but the policies adopted by the Biden Administration and the spending bills passed by the Democrat Congress have elevated inflation to levels they have not been at in many years. As long as Joe Biden is in the White House or Democrats control one House of Congress they will be able to prevent undoing the policies that have put us where we are. Starting on day one, the Biden Administration began adopting policies that fueled the growth of inflation. Despite it being obvious for months that inflation was running hotter than expected the Biden Administration was in denial, saying inflation was transitory. Supply chain issues were initially caused by other factors but the Biden Administration has talked about addressing this but none of their policies have been successful. On the other

Ken's Comments

Search This Blog