Recession 2 “Summer of Recovery” 0

“We are going to take on the barbarism of war, the decadence of racism, and the scourge of poverty, that the Ku Klux — I meant to say the Tea Party,” The Rev. Walter Fauntroy told a news conference today at the National Press Club. “You all forgive me, but I — you have to use them interchangeably.”

But don’t worry, if you disagree with a Liberal you’re the hyperbolic racist! 🙂

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Political Cartoons by Michael Ramirez

The government is about to confirm what many people have felt for some time: The economy barely has a pulse.

The Commerce Department on Friday will revise its estimate for economic growth in the April-to-June period and Wall Street economists forecast it will be cut almost in half, to a 1.4 percent annual rate from 2.4 percent.

That’s a sharp slowdown from the first quarter, when the economy grew at a 3.7 percent annual rate, and economists say it’s a taste of the weakness to come. The current quarter isn’t expected to be much better, with many economists forecasting growth of only 1.7 percent.

Such slow growth won’t feel much like an economic recovery and won’t lead to much hiring. The unemployment rate, now at 9.5 percent, could even rise by the end of the year.

“The economy is going to limp along for the next few months,” said Gus Faucher, an economist at Moody’s Analytics. There’s even a one in three chance it could slip back into recession, he said.

The report confirms the economy has lost significant momentum in recent months. Most analysts expect the nation’s GDP will continue to grow at a similarly weak pace in the current July-to-September quarter and for the rest of this year.

The economy has grown for four straight quarters, but that growth has averaged only 2.9 percent, a weak pace after such a steep recession. The economy needs to expand at about 3 percent just to keep the unemployment rate, currently 9.5 percent, from rising.

According to data released earlier this week, home prices fell as much as five percent across the country in the month of July, and existing home sales fell 27%.

The worst in 15 years.

But if you listen to the liberals and their pundits, it slow but it’s all good. You just to have more hope. Give it more time. Don’t be so impatient.

So what if GDP growth has gone for 5% in the last quarter of 2009 to 1.6% now it’s still improving! 🙂

And you wouldn’t to hand the keys back over to Bush now would you!

After all, Bush was Republican and all Republicans are Bush. (a gold star to anyone who can spot the logical fallacy in that statement 🙂 ) But isn’t that what the Democrats ARE saying…

Cue Sisyphus! 🙂

Will the economy actually enter a double dip, with G.D.P. shrinking? Who cares? If unemployment rises for the rest of this year, which seems likely, it won’t matter whether the G.D.P. numbers are slightly positive or slightly negative.

All of this is obvious. Yet policy makers are in denial. Why are people who know better sugar-coating economic reality? The answer, I’m sorry to say, is that it’s all about evading responsibility.(Paul Krugman)

After all, it’s Bush’s Fault! and you wouldn’t want <cue evil organ music> Republicans! they’ll just wreck the car again like they did before! 🙂

After all, Bush was Republican and all Republicans are Bush.

And as Mr Krugman also says, showing his liberal roots,”The administration has less freedom of action, since it can’t get legislation past the Republican blockade.”

The Democrats currently have an overwhelming majority in the House and 59/100 seats in the Senate and The Presidency.

Yet, it’s a “republican blockade”.

The problem is that the Democrats can’t get all the Democrats to vote for all of this crap so they have to blame the minority party for it!

It sure as hell can’t possibly be their fault! 🙂

So, if November happens as predicted and the Democrats are the minority, it will be the tyranny of the majority then right? 🙂 They will be the victims yet again, as they are now in the majority. 🙂

Perpetual Victimization!

But the Democrats will focus again on the 1 tree in the forest that isn’t on fire and say that’s you’re hope and change, just be patient, socialism wasn’t built in a day! 🙂

On Thursday, Standard & Poor’s said action is needed soon if the U.S. is to keep the much-coveted AAA bond rating that lets the government borrow in global markets at the lowest rates possible.

S&P’s warning came just days after Morgan Stanley asserted that the U.S., along with a number of other developed nations, is likely to default on some debt. Such defaults are “inevitable,” it said, given the growing number of retirees in developed nations who will have to be taken care of by a shrinking pool of workers.

The sovereign debt crisis “is not over,” said the investment bank’s Arnaud Mares, and that includes in the U.S.

What worries Wall Street is a public debt-to-GDP ratio of around 53%. That’s high enough as it is, but it’s about to go a lot higher. By 2020, recent data suggest, the ratio will top 100% — a red line that virtually all economists agree is dangerous.

In raw numbers, we owed roughly $7.5 trillion at the start of this year. By 2020 that explodes to $23.5 trillion, according to an analysis of Congressional Budget Office data by economist Brian Riedl.

What do these numbers mean? To begin with, we spend $187 billion a year, or 1.3% of GDP, to pay our debts now. Just 10 years from now, that will surge to $1.1 trillion, or 4.8% of estimated GDP. Fiscally speaking, we’ll be gasping for air.

Debt can be a good thing, but in big doses it’s poison. If, as some fear, the U.S. should simply say it can’t pay its debts and default — or do a de facto default by printing money to retire our debt — the consequences would be dire.

No nation would want our bonds in their portfolios. To entice them to buy, we’d have to offer a much higher risk premium — that is, higher interest rates.

That means our debt service could go even higher, squeezing out even more of our economy’s spending.

The dollar would implode, and prices for foreign goods — which now make up 15% of our economy — would soar. Private investment would shrink and, along with it, private-sector GDP

Americans’ standard of living, once the envy of the world, would recede into the pack of mediocre, government-run nations.

It doesn’t have to be this way. All this is due to unrestrained spending. The federal government now spends about $29,000 per household. That will rise to $38,000 by 2020. If you think “the rich” will, or can, pay for it all, think again.

Unless we begin to control spending, we can kiss our American lifestyles goodbye. It’s that simple.

Sadly, the White House is unwilling to see reality. Which may explain why, as our debts mount to ruinous heights, Vice President Joe Biden — President Obama’s point man on the recovery — can burble, “This is a chance to do something big, man!”

Yeah, man, something big — like wreck a country.

Warnings about America’s impending financial car wreck are being sounded, loud and clear. The only question is whether those driving the car will slam on the brakes before it’s too late.(IBD)

Got the car out of the ditch and drove it straight off a cliff and into a bottomless pit!

Way to go Barack & Co!

Yours is the Superior Intellect! 🙂

Drowning in a VAT of Debt

President Obama’s fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation’s economic output by 2020, the Congressional Budget Office reported Thursday.

In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president’s budget would generate a combined $9.75 trillion in deficits over the next decade.

“An additional $1.2 trillion in debt dumped on [GDP] to our children makes a huge difference,” said Brian Riedl, a budget analyst at the conservative Heritage Foundation. “That represents an additional debt of $10,000 per household above and beyond the federal debt they are already carrying.”

The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it’s headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO’s deficit estimates.

But ask a Liberal or the Fifth Column/MSM/Ministry of Truth and they’ll say it was George W. Bush’s fault and they are “fixing it”.

This like the plumber that comes over to fix your toilet and ends up flooding your house.

It’s not his fault.

God helps us all.

If the president opts to continue with the biggest ideologically based spending spree in history — risk to the economy be damned — federal spending for 2009-2020 will as a percent of GDP increase by an enormous 23% (or more) compared to the Bush/Clinton years, the government’s gross debt (public plus internal) will as a percent of GDP equal or exceed Greece’s, and catastrophe will follow.

Some analysts say that America’s AAA bond rating is already in jeopardy and may be lost by 2014 at the latest.

If one uses the Congressional Budget Office’s more realistic forecasts of interest rates, revenues and GDP growth, adding the president’s extra spending and debt is even more risky: The public debt in 2020 will be 91% of GDP. The gross debt will be 123% of GDP (compared with 115% to 125% in Greece today) and greatly in excess of the “tipping point” identified by Carmen Reinhart and Kenneth Rogoff in their recent landmark study of worldwide data.

On the other hand, the president could decide not to put America at such great risk and, therefore, to forgo adding the additional spending and debt. In that case, the public debt would be 56% of GDP and the gross debt would be 85% (or, according to CBO data, 68% and 100%).

As the night follows the day, the VAT cometh. With the passage of ObamaCare, creating a vast new middle-class entitlement, a national sales tax of the kind near-universal in Europe is inevitable.

We are now $8 trillion in debt. The Congressional Budget Office projects that another $12 trillion will be added over the next decade.

ObamaCare, when stripped of its budgetary gimmicks — the unfunded $200-billion-plus doctor fix, the double counting of Medicare cuts, the 10-6 sleight-of-hand (counting 10 years of revenue and only 6 years of outflows) — is at minimum a $2 trillion new entitlement.

It will vastly increase the debt. But even if it were revenue-neutral, ObamaCare pre-empts and appropriates for itself the best and easiest means of reducing the existing deficit. ObamaCare’s $500 billion of cuts in Medicare and $600 billion in tax hikes are no longer available for deficit reduction. They are siphoned off for the new entitlement of insuring the uninsured.

This is fiscally disastrous because, as President Obama himself explained last year in unveiling his grand transformational policies, our unsustainable fiscal path requires control of entitlement spending, the most ruinous of which is out-of-control health care costs.

ObamaCare was sold on the premise that, as Nancy Pelosi put it, “health care reform is entitlement reform. Our budget cannot take this upward spiral of cost.” But the bill enacted last Tuesday accelerates the spiral: It radically expands Medicaid (adding 15 million new recipients/dependents) and shamelessly raids Medicare by spending on a new entitlement the $500 billion in cuts and the yield from the Medicare tax hikes.

Obama knows that the debt bomb is looming, that Moody’s is warning that the Treasury’s AAA rating is in jeopardy, that we are headed for a run on the dollar and/or hyperinflation if nothing is done.

Hence his deficit reduction commission. It will report (surprise!) after the November elections. What will it recommend? What can it recommend?

Sure, Social Security can be trimmed by raising the retirement age, introducing means testing and changing the indexing formula from wage growth to price inflation. But this won’t be nearly enough. As Obama has repeatedly insisted, the real money is in health care costs — which are now locked in place by the new ObamaCare mandates.

That’s where the value-added tax comes in. For the politician, it has the virtue of expediency: People are used to sales taxes, and this one produces a river of revenue. Every 1% of VAT would yield up to $1 trillion a decade (depending on what you exclude — if you exempt food, for example, the yield would be more like $900 billion).

It’s the ultimate cash cow. Obama will need it. By introducing universal health care, he has pulled off the largest expansion of the welfare state in four decades. And the most expensive. Which is why all of the European Union has the VAT. Huge VATs. Germany: 19%. France and Italy: 20%. Most of Scandinavia: 25%.

American liberals have long complained that ours is the only advanced industrial country without universal health care. Well, now we shall have it. And as we approach European levels of entitlements, we will need European levels of taxation.

Obama set out to be a consequential president, on the order of Ronald Reagan. With the VAT, Obama’s triumph will be complete. He will have succeeded in reversing Reaganism. Liberals have long complained that Reagan’s strategy was to starve the (governmental) beast in order to shrink it: First, cut taxes — then ultimately you have to reduce government spending.

Obama’s strategy is exactly the opposite: Expand the beast, and then feed it. Spend first — which then forces taxation. Now that, with the institution of universal health care, we are becoming the full entitlement state, the beast will have to be fed.

And the VAT is the only trough in creation large enough.

As a substitute for the income tax, the VAT would be a splendid idea. Taxing consumption makes infinitely more sense than taxing work. But to feed the liberal social-democratic project, the VAT must be added on top of the income tax.

Ultimately, even that won’t be enough. As the population ages and health care becomes increasingly expensive, the only way to avoid fiscal ruin (as Britain, for example, has discovered) is health care rationing.

It will take a while to break the American populace to that idea. In the meantime, get ready for the VAT. Or start fighting it.(IBD)

So add to that the “Universal Retirement” where you are forced to fund the National Debt through Treasury bonds and all the Taxes for the Health Care Bill that will not drive you into the hands of the government but your employer as well.

Doom is coming over the horizon.

And the only thing we can do is REMEMBER IN NOVEMBER!