Click on WORD or PDF for full content
Happy New Year!
While Washington’s idiots are pretending to solve our fiscal problems, here’s Mort Zuckerman to explain why the coming years are not going to be so happy.
… We are on a trajectory of cumulative fiscal deficits that cannot possibly be sustained. We have gone from being the world’s largest creditor nation, with no foreign debt at the end of World War II, to the world’s largest debtor, with roughly half of our public debt held by foreign lenders. Over the last four years, our national debt has grown by more than $5 trillion to over $16 trillion. We have to service that debt. The Federal Reserve is keeping rates historically low but here’s the cost of paying interest on the debt for fiscal 2012: $359,796,008,919.49
What do you get for that? Nothing.
The greatest fiscal challenge to the U.S. government is not just its annual deficit but its total liabilities. Our federal balance sheet does not include the unfunded social insurance obligations of Medicare, Social Security, and the future retirement benefits of federal employees. Only in the small print of the financial statements do you get some idea of the enormous size of the unfunded commitments. Today the estimated unfunded total is more than $87 trillion, or 550 percent of our GDP. And the debt per household is more than 10 times the median family income.
The public doesn’t know about these awesome liabilities because the totals appear only in actuarial estimates. As Chris Cox, former chairman of the Securities and Exchange Commission, and Bill Archer, former chairman of the House Ways and Means Committee, recently noted in the Wall Street Journal, the real annual accrued expense of Medicare and Social Security alone is $7 trillion. The government’s balance sheet does not include any of these unfunded obligations but focuses on the current year deficits and the accumulated national debt. Cox and Archer reported that the annual budget deficit is only about one fifth of the more accurate figure.
If the American public saw our financial statements in the same way that public companies report their pension liabilities, it would clearly see the magnitude of danger represented by the future borrowings that these liabilities to an aging population imply—borrowing on a scale that would not only bankrupt the programs themselves but the entire federal government. And to a worrying extent, we are locked into continued escalation by the fact that social insurance programs, as well as other mandatory programs, carry payments that are in accordance with automatic formulas written into law and are not subject to an annual spending limit. Today, less than 40 percent of our budget is actually decided by Congress and the president, down from 62 percent 40 years ago. …
… The result of a debt crisis would be not only a significant increase in the interest rates we have to pay (and think of what that would do to the “recovery”), but also a potential decline in the value of the dollar. We have managed to keep up appearances, but the performance is less and less credible. Investors who have relied on the good faith and trust of the U.S.A. look at how we fudged and fumbled and name-called to the edge of the fiscal cliff, and they’re focused on what we do or not do. No one knows when investors will lose confidence in the willingness and the ability of the federal government to put its financial house in order. No one knows how much interest rates would go up, but we do know it would be just as sudden and dramatic as it has been in the endless Eurozone crises. Nobody knows precisely when and if this crisis will occur, but for now we’d do well to rely on the sagacity of one character in a Hemingway novel, who, when asked “how did you go bankrupt?” responds: “Two ways. Gradually and then suddenly.” That’s what we face when investors lose confidence. Interest rates will surely rise quickly, and each percentage point will force the federal government to pay an additional $150 billion annually in interest. …
Jennifer Rubin explains how the president makes things worse.
Let’s get this straight: The president can’t make a deal with the speaker of the House on the fiscal cliff. He then punts to the Senate Majority and Minority leaders, but alas Sen. Harry Reid (D-Nev.) can’t even come up with a counteroffer. Reid then punts to Vice President Joe Biden, who presumably is more skilled than the president at this sort of thing. One is tempted to ask what President Obama really does all day.
The answer is neatly summed up by Yuval Levin:
“The president’s appearance on Meet the Press [Sunday] was downright pathetic in this regard, as have been his various press statements in the past few days. This sort of preening and lecturing from a politician who has basically just failed to do his job is bizarre. …”
The country might have a fighting chance even with the narcissist as president if only the media would ask some tough questions. Rubin examines their failures.
David Gregory’s Sunday interview with President Obama was typical of the softball, ineffective mainstream media encounters with the president we’ve been seeing. We can argue whether media personalities are bad at their job or intentionally inept, but the result is the same.
Here are the unasked questions that would have shed some light on the president’s record and intentions for 2013:
Why haven’t you put forward a concrete plan for Medicare reform?
Your fiscal cliff plan contains far more taxes and far less spending reductions than the Simpson-Bowles plan or other bipartisan proposals, so how does that meet the GOP “halfway” as you claim?
Why haven’t you and White House advisers gone through an accountability review process on Benghazi as the State Department did? Were you ever briefed on the deteriorating security situation in Benghazi? What were you doing during the attacks on our consulate? Why did you continue to tie the attacks to a demonstration over an anti-Muslim film after we established there was no demonstration and there was al-Qaeda involvement?
Was it a mistake to claim you had al-Qaeda on the run?
Your own defense secretary says the sequestration cuts would be devastating to national security, so how can you allow those to go forward?
Why did you up the ante on tax hikes in your negotiations with the speaker of the House in 2011 and let the debt ceiling deal slip away?
Did you break your promise to Elie Wiesel you would do everything possible to stop the mass atrocities in Syria? More than 38,000 are dead, and we have not done so much as set up a no-fly zone.
Why haven’t you put forth your own immigration plan, and will you do so in the second term?
How are you going to implement Obamacare without so many governors refusing to set up exchanges?
There is no evidence the 1994 assault weapons ban worked, so why do you favor imposing it again?
These are just a small sample of the type of queries the president rarely faces. The notion that the media is a defender of the public’s “right to know” is belied by its refusal to press the president on the most important issues of the day. No wonder the president feels no obligation to be transparent or to take responsibility for serial policy failures.
More on the Gregory/obama interview from Streetwise Professor.
If you want a perfect illustration of the MO of the insular, for me-but-not-for-thee government elite, take a quick look at David Gregory’s week.
Gregory engaged in a prima facie violation of DC’s gun laws by brandishing an illegal 30 round magazine (NOT A CLIP!) on last week’s version of Meet the Press.
If you had done that, or if I had done that, then: (a) there would have been a hue and cry denouncing our actions, and (b) we would have been frog-marched by the local constabulary, fingerprinted, and arraigned.
But not our David. He’s acting in the service of A Higher Cause. That cause being disarming you and me.
He (and his producers at NBC) had attempted to get permission beforehand, but failed to. They proceeded anyways. After questions were raised, they received some sort of indulgence, and David is still at liberty.
That was an ironic statement. Not only is dear David at liberty, this firearms felon was awarded with an interview with Obama, no doubt for his service for The Higher Cause.
The interview was even more nauseating than one would have usually expected. Gregory-(I sh*t you not)-asked Obama if “this is your Lincoln moment?” I’m only shocked he didn’t ask: “is this your Jesus moment?” …
David Harsanyi and the failure of the auto bailout.
You may recall that during the presidential election, the Treasury Department refused requests by General Motors to unload the government’s stake in the giant automaker.
Taxpayers had sunk $50 billion into a union bailout in 2009 and were now proud owners of 26.5 percent of the struggling company. Reportedly, GM had growing concerns that the stigma of “Government Motors” was hurting sales in the United States. At the time, any transaction would have come at a steep loss to taxpayers and undermined the president’s questionable campaign assertions that the auto union rescue had been a huge success.
Well, now that the election is over and the Treasury Department is freed of political considerations, it plans to sell its 500 million shares of stock over the next 12 to 15 months and ease its way out of the company. GM will buy around 200 million shares at $27.50 per share by the end of the year. GM’s buy brings taxpayers back to around $5.5 billion of the $27 billion the company still owes. The special inspector general for TARP estimated in October that the Treasury would need to sell the remaining 500 million shares at $53.98 per share just to break even on its investment.
Once GM buys its 200 million shares, the taxpayer stake in the company will drop to 19 percent, but the price to break even on the remaining 300 million shares will be around $70 per—or, in other words, probably never. As of this writing, GM shares are trading at around $27 per share. That, in the Obama era, is considered a successful transaction between the state and private industry. So successful that you’ll also remember that during the campaign, Obama maintained that “what we did with the auto industry, we can do in manufacturing across America.”
Taxpayer funds and unions for everyone. ….