Throwing the book — a new book — at Obamanomics.
My new book, America’s Ticking Bankruptcy Bomb, published by HarperCollins, went on sale this week. The book begins by explaining the overwhelming tidal of wave of government spending, taxes, deficits and debt swamping our economy and threatening ultimate bankruptcy for America. But this book is not just about the problems, but also about the solutions.
Defusing the ticking bankruptcy bomb that is threatening to explode American prosperity will require first creating another economic boom to restore traditional American prosperity. Only surging economic growth will produce the booming revenue base essential to avoiding national bankruptcy, and reduce dependency sufficiently to enable the necessary slashing of government spending. The book explains exactly all the specifics of how to create another generation-long, 25-year economic boom, drawing on my background working for President Reagan in the White House Office of Policy Development.
If you want smaller government, then this is the book for you. It provides a thoroughly detailed, specific roadmap for ultimately cutting federal spending in half, or more, over time, drawing on my experience working for virtually every major free market think tank for the last 30 years. That is all accomplished with politically seaworthy reforms. I don’t believe in kamikaze missions.
The top federal income tax rate in this booming future America is 15%. The payroll tax is eventually replaced entirely by personal savings, investment, and insurance accounts ultimately financing all of the benefits financed by the payroll tax today. State income taxes in the 41 states still suffering from that barbarous relic are phased out completely through a Taxpayer Bill of Rights limiting the growth of state spending to the rate of population growth plus inflation. The federal budget is eventually balanced permanently.
Essential to achieving this vision of smaller government is fundamental entitlement reform, also explained in thorough detail in the book. By modernizing our old-fashioned, tax and redistribution entitlement programs to rely on 21st century capital, labor, and insurance markets instead, we can achieve all of the social goals of these entitlement programs far more effectively, serving seniors and the poor far better, at just a fraction of the current cost of those programs. Such reforms would involve powerful market incentives driving the programs to contribute further to booming economic growth and prosperity, rather than detracting from it.
Lighting the Fuse
During George Bush’s eight years as President, the federal government grew by one-seventh relative to the economy, after Republican Congressional majorities had so promisingly reduced it by that amount from 1994 to 2000. But when President Obama got behind the steering wheel in 2009, he accelerated into hyperdrive even more so in all the wrong directions, doggedly pursuing the opposite of Reaganomics in every detail.
Federal spending under President Obama has already soared by another fourth relative to the economy, to the highest in history except during World War II. His own 2012 budget proposes to increase it by another 57% by 2021. That budget projected the federal deficit for 2011 at $1.645 trillion, the highest in world history by far. Already this year, for every dollar of federal spending, 43 cents will be borrowed. Spending for Social Security, Medicare, Medicaid, and the income security programs (mostly welfare) will consume 95% of all federal revenues. What is left will not even be enough to pay interest on the national debt, equal to 10% of federal revenues. All the money for everything else the federal government does, including all of national defense, law enforcement, transportation, agriculture, indeed, for every cabinet department outside of spending for the above entitlements, all will have to be borrowed.
The national debt, now rocketing towards $20 trillion by 2020, is already the highest in history relative to GDP except for World War II, and on its current course will soar well past that record. Indeed, the national debt has been rocketing upwards so fast that under current policies that more debt will be run up in one term under President Obama than under all other Presidents in history — from George Washington to George Bush — combined, according to President Obama’s own 2012 budget.
On our current course, indeed, our national debt as a percent of GDP will soar past the level that triggered bankruptcy for Greece, when the financial markets refused to lend the government enough to cover its enormous annual deficit. The European Union tried to end that crisis with a trillion dollar bailout financed by its taxpayers. But who will bail out America? Who even could?
Even worse, the national debt does not nearly encompass everything the government owes, or on which it is subject to liability. The best estimate of the unfunded liabilities for Social Security and Medicare is over $100 trillion. Usually overlooked as well are the unfunded liabilities for federal military pensions ($3.7 trillion), veterans benefits ($1.5 trillion), and federal civil service pensions ($2.1 trillion). Then there are the FDIC’s guarantees for $5.4 trillion in bank deposits, the FHA’s guarantees for $1 trillion in home mortgages, and trillions more in mortgage backed securities and federal guarantees of those securities held by the Federal Reserve, Fannie Mae, Freddie Mac, and the FHA. None of this is counted in the national debt.
For context, our entire economy only produces $15 trillion a year.
Somehow, President Obama insisted that it was a good idea to add all of the entitlement promises of Obamacare on top of these obligations. Obamacare added a costly new entitlement program to provide federal welfare subsidies for health insurance for families making as much as $88,000 per year, soon climbing to over $100,000. Woefully overpromised Medicaid, the health care program for the poor, was sharply expanded to cover nearly 100 million Americans by 2021 according to CBO. While President Obama won enactment of Obamacare promising it would reduce deficits, it will actually add another $4 to $6 trillion to the nation’s deficits and debt over the first 20 years alone, as explained in the book.
State and local governments add even further to the problem. People use the term “failed state” to refer to Somalia, with its disintegrated government. But that term may increasingly be applied to California, New York, Michigan and Illinois, with their out of control state budgets and deficits, runaway government pensions, dysfunctional education bureaucracies, and increasingly belligerent public sector unions.
These states already resemble Greece, with our federal government already bailing them out at taxpayer expense, which started in President Obama’s first stimulus bill in 2009. State and local government debt has soared toward a projected $4 trillion, or another 24% of GDP, by 2012. The unfunded liabilities of state and local pensions total $3.8 trillion, with state and local promises to pay retired employee health benefits adding further unfunded liabilities of $1.4 trillion. None of this is counted in the national debt either.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?
H/T to National Review Online