Its Worse Than You've Been Told

One of the big topics of the upcoming election is the national debt and the yearly deficit. Although there have been recent attempts to portray President Obama as a fiscal conservative, we all know that this administration has spent and borrowed more than any other. We know he has added five trillion dollars to the national debt and that yearly deficits under his administration have been 1.3 to 1.5 trillion dollars. These are the numbers we are familiar with. They are very bad. We are borrowing forty cents out of every dollar and using these numbers, we would have to cut the federal budget by forty percent to balance it. We know the Democrats have no intention of attempting that but do you really think that the Republicans have the guts to cut real expenditures by forty percent? Or twenty? Or ten? Or even five? The gimmicks of reducing the deficit by some amount over ten years may fool some but they are worthless gestures that do nothing to slow our headlong rush to fiscal destruction.


Even if the looters in Washington could muster the political courage to cut the deficit in half or, miracle of miracles, balance the budget, it would all be a lie. You see, Washington doesn’t use the same accounting practices every other business in America is required to use. In fact, if a business did accounting like the politicians in Washington they would be in jail. But fudging the numbers for political benefit has a long and storied tradition in Washington, just look at the economic numbers, especially unemployment, they put out on a regular basis. Getting back to the point. Washington does not have to include future benefits in its budgetary considerations. A business must include future pensions and health benefits in its yearly budget, Washington does not. If it did, the numbers would get much, much worse. While many of us have heard that the national debt of sixteen trillion dollars is just the tip of the iceberg and unfunded liabilities put that number in the one hundred trillion dollar range, putting that in yearly and personal terms is something else entirely.
The yearly deficit under standard accounting practices, is a smidgen over five trillion dollars. Every year. This is not new, of course. Go back to the Clinton administration and the "balanced budget" and "surpluses" the he and the Republicans like to crow about. It was all an accounting trick. In fact the national debt rose by 1.6 trillion during Clinton’s eight years. The surpluses were created by taking all Social Security income and treating to as ordinary income. If any corporation treated pension contributions as ordinary income and spent it all its officers would be in prison. Yet our politicians do it routinely and lie about it with a smile.


There is no way to make up this deficit with taxes. No way. The average yearly household income in the United States is around $49,000. To balance the budget the government would have to confiscate $42,000 of that, leaving the average family $7000 a year to live on. In fact, if we collected one hundred percent of the income in this country, we would still be running a deficit. That is not going to happen. Raising taxes is not going to solve this problem. When the government is spending half our GDP, they cannot tax enough to cover it all without destroying the economy completely. But they are going to try. While confiscating all the wealth of the rich would fund the government for days or hours, politicians, particularly Democrats, will try to convince us that taking more money from the people who create wealth will improve the lives of those who don’t.


In addition to taxes, an even more nefarious scheme to keep people from protecting their wealth is coming. We all know that some corporations keep a portion of their profits outside the United States because we have the highest corporate tax rate in the world and that wealthy individuals often keep some of their money "offshore" to protect a portion of their assets. As our situation becomes ever more dire and the government looks for ways to get hold of even more of our money, politicians are considering ways to keep it here in the country where their tentacles reach into every financial institution. Barny Frank and Sander Levin recently wrote a letter to Timothy Geithner complaining that our current trade agreements don’t adequately address "capital controls." What they are concerned about is the ease with which capital can flow out of the country and into other non US investments. I would like to remind you that one of the ten goals in the communist manifesto is the confiscation of the wealth of emigrants. What this means is that the government wants the ability to keep you from protecting your wealth by trading dollars for gold or other currencies.


Why does that matter to the vast majority of us who don’t have offshore accounts or trusts? Because neither party in Washington is going to make the cuts necessary to solve our fiscal nightmare. They are not going to eliminate any departments, they are not going to reduce Social Security or Medicare benefits, they are not going to cut military spending, food stamps or unemployment benefits. They do not have the political will or courage to do it. They will ride this horse to death and we are the ones who will pay the ultimate price. The only way the government can pay for all this is for the Federal Reserve to keep printing money. They have been printing trillions of dollars every year and inflation is rearing its ugly head. The only thing that is keeping the dollar strong at this point is that Europe is in even worse shape, in the short term, than we are. The dollar is the "least worse" currency right now. When that changes, hyperinflation will wipe out the savings and wealth of the average American and the only way to protect yourself is to own something of value other than dollars. But the politicians are working on making that impossible (remember FDR outlawed gold ownership, it has happened before), ensuring that we all go over the cliff together. Everyone except the political class and their well connected friends.


It is time to tell the truth. It is time to elect people who know it and are willing to take the radical steps needed to mitigate the worst effects of our foolishness. It is time to try liberty once again. Democrats and Republicans have gotten us into this mess and neither has the courage or desire to get us out. It is time for real change.