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How Obama and Big Spending Republicans Made America the World’s #2 Economy

Obama Economy

The news that, for the first time since Ulysses Simpson Grant was President, the United States was not the world’s top economy seemed to barely make a ripple in the establishment media, overshadowed by their obsessive coverage of riots in Ferguson, Missouri, and the presumed race-based death of Eric Garner on Staten Island, New York.

But make no mistake about it. The death spiral of the U.S. economy is the more important and profoundly frightening story because it has generations-long implications for American quality of life, national security and domestic policy and politics.

Let’s start with a proposition that President Obama and many in the establishment media share – America has no right to be #1 in anything.

Americans constitute 5% of the world's population, but consume 24% of the world's energy. New houses in the U.S. were 38 % bigger in 2002 than in 1975, despite having fewer people per household on average. An estimated 65 % of U.S. adults are overweight or obese, in the view of Obama’s urban elite allies and influencers Americans are like locusts consuming the world’s resources, but contributing nothing in return.

And the only way to curb this greedy overconsumption is through government mandates and restrictions on American freedom and economic choices – thus Obama limits energy production and consumption by eliminating coal-fired electricity plants; food consumption, such as school lunches, is regulated by the government and cars must be made smaller and less convenient to use to force people onto the allegedly more efficient public transportation system.

The result of these policy choices by President Obama, which have been facilitated, we might add by compliant Capitol Hill Republicans, has been to distort markets and to keep investor cash on the sidelines.

Estimates of the amount of cash kept out of the market by investors skittish of Obama’s policies vary, but the most common number used is $2 trillion.

$2 trillion is a staggering sum in relationship to the main economic drivers of the American economy – small business – and it is almost twice the combined market value of Wal Mart, Apple and Warren Buffett’s Berkshire Hathaway.

But it has been relatively constant over the past few years and thus pales in comparison to the impact of the amount of money that the government has been withdrawing from the economy and shipping overseas – primarily to China – in the form of debt service.

This year, the federal government will pay $221 billion in interest charges – that is the market value of Chevron – EVERY YEAR.

As our friend Michael Tanner of CATO observed in a review of a Congressional Budget Office report earlier this year, “The CBO report also points out that interest on the debt is becoming an ever larger portion of federal spending. This year, the federal government will pay $221 billion in interest charges. By 2024, that will rise to more than $876 billion. Not long afterward, we will be paying a trillion dollars every year just for interest on the debt. By 2035, in fact, interest on the debt will be tied with Medicare as the second largest line item in the federal budget, trailing only Social Security. And this assumes that interest rates won’t rise back to their historical norms (though the CBO assumes they do rise some).”

Tanner also noted that CBO projections have almost always been wrong, erring on the low side to make government spending and debt look less damaging.

Since Obama became President the United States government has extracted from the economy and paid over $1 trillion in interest, and that doesn’t include the close to $8 trillion in new debt the government has chosen to take on.

In the old terms of the New Deal-type politics favored by the Democrats, and many establishment Republicans, this deficit spending and borrowing would have been justified on the basis of putting Americans to work or other domestic benefits, but that hasn’t been the case under Obama.

Employment and workforce participation have plummeted and are actually at historic lows as these vast amounts of money have been withdrawn from the private economy and pumped into paying ever-increasing public benefits and crony government programs such as green energy.

If you want to know why the United States is now the world’s #2 economy and why American corporations are holding some $2 trillion in cash – much of it overseas – look no further than the interest payments on the national debt and contemplate the confiscatory taxes that would have to be collected to balance the budget when interest payments equal $1 trillion a year.

We think the point at which spending must be reined-in was reached and passed a long time ago.

Much as they will try, Republicans in Congress cannot blame this state of affairs entirely on Obama and the Democrats – they have promised to be the Party of fiscal responsibility, but whenever they are put to the test on spending they buckle and keep right on spending.

And make no mistake, at some point Congress has to balance the budget and the only ways to do so are to cut spending, raise taxes or do both. Such a tax burden would wreak havoc on the American economy and our country's quality of life for generations to come. 

This politically motivated spending – literally the attempt to buy our votes with our own tax dollars – is killing the country, and it must be stopped. Slowing the rate of the increase in spending isn’t enough anymore. Choosing to spend at this level – and it is a choice by Democrats and Republicans alike – amounts to a betrayal of our country and it is time we call it what it is; a treasonous level of spending, deficit and debt.

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Budget for the government

Our politicians do not understand the word "BUDGET". We need to get this congress, the agencies, the president, etc back to using common sense like the rest of the legal constituents of this country in this very tight job and pay market. This bunch of fools seem to think spending and printing money means that all is well. NOT! Every year the budget battle gets even further out of shape. If and agency has been conservative at the last minute there is a buying spree because they fear their budgets will be cut. Well, it is time to just cut regardless in the government. Right now it is better financially to be in the government employment. Use to be the private sector paid better but not any more. That alone should be a telling argument.

This also does not address the greed of the corporations and big business. 11 million illegal aliens are here to satisfy the demand of the noted businesses and corporations to help lower their costs of doing business. Hire cheap and drive the wages down. Then skimp on benefits and qualify your really poorly paid new illegal aliens for welfare. Since welfare is funded with the majority of the population working and paying taxes that support welfare the people pick up the additional tab. Big business and corporations win again and we the public get more welfare recipients.

One other point here, since when was it legal and lawful for illegal aliens to get the welfare benefits they have been taping without a legal amnesty. Who opened that door? It is definitely time for some serious changes in our government.