According to guys like Diamond Dave and Yurt, the deficit last year was over a trillion dollars. That being the case, its not even being doubled this year. Not a bad price to pay in a year where his policies are looking like they have saved the country from a depression.
Thanks to Obama, and to the Bush administration to, for taking fast action to avert a potential disaster.
As much as I hate all of this spending, the TARP money was necessary; the stimulus package however, was pretty much just wasted money being thrown out there. I know a great many people would have liked to just see the banks fail, but that would not have been good for us in any way.
My problem with Obama, the Dems, and current thinking, is not this year's deficit, as great as it is. My problem is with future projections of increasing deficits due to a complete lack of fiscal responsibility. Once the banks are back on stable ground, there is no reason to continue increasing the size of the federal government, and this is the Democratic agenda.
Based on current projections, the federal government is going to grow to over 30% of GDP, a higher percentage than we have seen since WWII. For the last 50 or so years, the federal government has only accounted for around 20% of GDP, give or take a few percentage points at various times during that period. Now, however, the projections are moving beyond that 30% threshold and there seems to be no looking back. This doesn't even take into consideration the lack of funding for SS and Medicare, which if not addressed, will push that 30% to 40% of GDP within the next 15 to 20 years.
The writing is on the wall. There is no way that the economy is going to expand to the point that federal spending can be kept at the 20% figure without making some real changes including changes to SS and Medicare. As the government continues to spend more and more, the deficit will become unmanagable, and it will need to be addressed with the only option left, higher taxes for everyone. How much higher? Based on the fact the government will be spending twice as much as it has in the past, taxes will need to double, for everyone.
And guess what? This doesn't even include moving our healthcare to a one payer system run by the goverenment. Doing this, will move federal spending to around 50% of GDP. That will just be the federal goverenment. When we add in state spending and local taxes, nearly 60% of GDP will be derived from government spending. This is the path we are on, and it will be here sooner than most can imagine.
What will this do to the economy? Almost cerainly, the economy will begin to contract. At best, we will find ourselves is a no growth or slow growth economy and it will be permanent. The government will make certain everyone's minimal needs are met, but personal wealth will be destroyed completely. The very rich will hold on to most of their money, but you won't see new millionaires being self made over and over as we have in the past. Those generations following ours will have a standard of living less than what we enjoyed, and that trend will continue downward for following generations.
There are alternative options, and maybe the American electorate will actually wake up before this takes hold. But it will require a true awakening of those on the left to the realization that all the things they long for are just too expensive and not in the best interests of the whole. It will come down to the realization that fiscal responsibility and limited spending is the only way to long term wealth for everyone.
Is this possible? We can only hope.
