Posted by
coopmeister on Wednesday, February 03, 2010 4:05:56 PM
How did we become deeper in debt today than we were in 1946,
just after World War II.? The deficit then was easily in excess of 100% of GDP.
Speed ahead to 2001 when GWB took the reins from Bill Clinton.
Bush was told by the CBO that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012.
That's Right, a Surplus of $800 billion annually from 2009 to 2012!!
In 2010, the federal government estimates a $1.6 trillion deficit, based on FY 2009 (GWB) budget.
So, from budget surpluses to gut-grabbing deficits, worse, with debt owed to a cantankerous ascending superpower.
HOW?
Living in the Eye of the Perfect Storm
FY 2001 to FY 2008 - the big clumsy decline in budget health due to GWB's
policies of tax cuts and spending increases
FY 2008 to FY 2009 – the financial meltdown, collapsing economy, and hurried
new policies to stave them off. \
We are now in the deepest recession since the 30’s.
An economy mired down by:
o Bottle-necked and terrified credit markets
o Historic decline in housing prices,
o Continuing mortgage defaults
o Massive job losses and stagnant high unemployment
o Loss of equity value, probably something like $13 trillion American family wealth, poof!
And the country is hoppin’ mad, and angrier as each day rolls out.
Some Americans have morphed into a Tea Party, hell-bent on destroying Obama. It’s as though they are determined to return to the 1776 America of their youth, their America!
In this setting Sarah Palin has risen to lead the TP’s to the coming "revolution." Yikes!
Some other Americans see the Tea Party thing as a mind-boggling cultural phenom
akin to an irrational angry mob set on revenging something that never existed.
Different sides of a potent populist backlash.
Most Americans are somewhere in between, wanting solutions to secure and grow jobs, restore economic function, and maintain strong national security.
But the machinations in DC are demoralizing, and the politicians “have no clothes” reality is hard to take.
On the brighter side, economists, Auerbach and Gale argue that we may be ina once in a generation
– an ideal time -
to undertake broad-based reforms.
But what is the “baseline?”
To create benchmarks to measure effectiveness of fiscal policies,
we have to know the starting point.
Either Obama is acting:
A. Fiscally responsible, relative to the path the country was on,
B. Or fiscally reckless relative to current law.
Ironically, from 2001 to 2008, Bush asked Congress to make his tax cuts permanent.
He was refused every time, even with a Republican Congress when the budget projections suggested future surpluses.
Why should Obama “own” expiring Bush tax cuts and incorporate their cost and the interest on the costs into an already deficit-ravaged budget?
Big Question Facing Us
Can our government undertake the very delicate balancing act between policies to improve the economic recovery and policies to ensure fiscal solvency over the next decade?
Then Came Igor Panarin
I was galled to read about Igor Panarin, a Russian intellectual and patriot, who has predicted the U.S. will fall apart in 2010, and says, among other things, "It would be reasonable for Russia to lay claim to Alaska.”
Well Mr. Panarin, in 1946 with deficits 123%of GDP, the US not only recovered, but wowed the free world with its prosperity, innovations and generally positive global muscle.
Americans are a motley crew of tough, independent-minded people. We have problems. We’ve made mistakes. We fight each other like rapid dogs.
But just tell us that you intend to “take over” Alaska, when we fall apart…and I will hug my Tea Party brothers and sisters, and kick your sorry backside.