After the Downgrade

By Doug Magill

It was disconcerting to read the Plain Dealer’s Sunday editorials blaming our current fiscal crisis on…..Congress.  In addition, say the newspaper pundits, we aren’t spending enough!

The columns claimed we need Obama’s latest Third World craziness – an infrastructure bank, along with R & D tax credits, and more spending for NASA.  There was also a little scolding about the FAA imbroglio, which really turned on a backdoor attempt by Democrats to sneak in union-enhancing rules.

The PD staff doesn’t understand leadership, and clearly doesn’t grasp enterprise.  By blaming Congress, and not focusing on the president’s intransigence and lack of leadership, the journalists show the depths of bankruptcy into which liberal thought has devolved.

The president was elected to lead, but his “voting present” and “leading from behind” on major issues is clearly catastrophic.  His leadership ensures that we will lurch from one disaster to another until the next election.

I recall a brief exchange with an intellectually marvelous young lady before Obama’s election.  She was in love with the concept of Obama.  I called her to task on the fact that under Obama abortion not only would become more widespread but would be more actively encouraged along with embryonic stem cell research.  Positions that would normally be anathema to her professed Catholicism.  Responding with some puff nonsense about then-candidate Obama’s leadership, her self-love for liberal pieties overrode her Catholic faith.  And so it is with most intellectuals today – they like to feel superior by mouthing liberal platitudes more than they wish to have any intellectual, moral or spiritual rigor.

And so the U.S. debt has been downgraded because there is no apparent leadership on controlling spending and reducing the debt.  No one should be surprised.  And, it should also have been obvious that the White House and its acolytes are breathlessly hammering newsprint and the airwaves with a message of non-responsibility.  The rating agency, the Tea Party, Congress, the Republicans, and the washer-woman in Hell’s Kitchen all get blamed.

Leadership means taking ownership.  The constant blame-shifting and accountability-avoidance that are now the hallmarks of Obama’s presidency are not only appalling, they are debilitating.  The vacuum that is the White House is sucking the very life out of our country.

Obama’s stimulus plan took money from our children to fund government employees and union friends rather than real investments.  His April 2009 budget included massive increases for federal departments and agencies; that is now the baseline for negotiations.  Then a campaign to jam in an unpopular health care plan that will explode the deficit.  Let’s not forget the February budget proposal that not a single democratic senator voted for.  Not one.

Just prior to the S&P announcement, the president, in full narcissism mode, headed home to Chicago to have a birthday party and give another empty speech.  It is inconceivable that at a time when we really are looking at the abyss that the President wants to party.  The symbolism is too rich, and too profoundly sad.

In 2007, prior to Obama’s election, the federal deficit was $152 billion, a five-year low.  For the next four years, while both houses of Congress were controlled by Democrats, the deficits were:

2008 – $460 billion

2009 – $1.4 trillion

2010 – $1.3 trillion

2011 – $1.6 trillion

And, for more than two years the Democrat-controlled Senate has refused to fulfill its constitutional obligations by passing a budget.

Is it any wonder that Standard & Poor’s downgraded our debt?  A president who doesn’t lead, and a Senate that has dived into the bunker.

And, by the way, the dishonesty of the discussion has become disgusting.  At the same time there is  groaning about the cuts of the recent compromise to allow an increase in the debt ceiling, the fact is lost that we are using baseline budgeting;  the overall expenditures of the country will still increase at an unsustainable level.

We are supposedly cutting $900 billion over 10 years.  Now that sounds like we will be reducing spending by that amount.  Nope.  You have to understand how Washington works.  What that really means is that we will really be increasing spending over those ten years by around $7 trillion, rather than $8 trillion.  That’s how you cut spending in DC – reduce the amount of increase.  Come on, you didn’t really believe that there was going to be a real reduction in the total amount spent, did you?

So here is what we are looking at.  If we don’t get serious now, within the next 10 years our debt interest alone will exceed defense spending and will begin to control 20 percent of the federal budget, and keep climbing.  So, one-fifth of your tax dollars will be going to pay for essentially nothing.  That presumes, of course, that interest rates remain at their current historical lows.

Which isn’t going to happen.  If we continue to slip in the eyes of bond-rating agencies those numbers will get worse, much worse.

The market has processed all of this and rendered a verdict in the last few days– absent leadership we have already seen over two trillion dollars in value vanish, with more to come.   A lot more.

 

Doug Magill is a consultant, freelance writer, and voice-over talent.  He can be reached at doug@magillmedia.net

 

 

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Comments

  1. I guess you voted for the re-election of Clinton.

  2. Well done, Doug. That’s what we needed to read, but won’t find in the pages of the Pee-Dee.

    The leadership gap will likely continue along with the sagging economic indicators.

    As I noted on my LinkedIn site, today’s POTUS speech in particular was the communications equivalent of Little Big Horn. UPI reports: “While Obama spoke, the Dow losses hovered around 425 points, then topped 500 after he finished.”

    Even the smoothest delivery cannot trump hard facts. And the facts are clear: we’re in trouble as a nation and as an global economic engine.

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