Thursday, January 21, 2010

The Financial Regulation Lie

Politicians in Washington keep telling us that it is the financial system that needs regulation.

What Washington won't tell you is that the greatest risk to our economic system lies not with Wall Street. It lies with the federal government's catastrophic debt -- and the wounded U.S. dollar -- inflicted upon us by the very same politicians scapegoating the financial services industry.

About half of the federal budget must be paid for by borrowing money from foreigners, primarily from China. This behavior has frightened global investors and severely weakened the dollar.

Last June, the Congressional Budget Office warned that the "federal budget is on an unsustainable path -- meaning that federal debt will continue to grow much faster than the economy... [and] Rising costs for health care and the aging of the U.S. population will cause federal spending to increase rapidly..."

"... Large budget deficits [will lead] to more borrowing from abroad and less domestic investment, which in turn would depress income growth... The accumulation of debt would seriously harm the economy. [Or] if spending grew as projected and taxes were raised in tandem, tax rates would have to reach levels never seen in the United States [95%]."

Yet the same federal bureaucrats who decry the financial system are themselves addicted to spending far beyond their means. But why would they care? They will be long gone by the time their bills will come due.

Dichotomy: outside the U.S., the "biggest story in the world economy is the continuing fall of the U.S. dollar" (Wall Street Journal); while inside the U.S., the mainstream media gleefully markets the proposition that that Congress' "Baucus Bill" is cost-neutral.

Even before the health care bill becomes law, $9.3 trillion of new deficit spending was added to the national debt. The Baucus Bill supposedly gets its cost neutrality by slashing Medicare ($400 billion) and raising taxes on health care insurance premiums (another $400 billion).

But the mainstream media forgot to tell you that even the CBO doesn't trust its own numbers! The head of the CBO wrote Baucus, telling him that -- if Congress failed to cut Medicare (highly likely, given seniors' voting habits) -- the new entitlement would add catastrophic new debt to the federal budget.

But even if the numbers were real, the illogical thinking is shocking. President Obama told us that passing health care reform was central to a healthy economy. The Democrats proclaim victory with supposed deficit neutrality while our current "unsustainable" deficit grows like a devastating form of cancer.

Instead of just starting with cuts to Medicare and adding insurance taxes -- thereby cutting the 10-year deficit by $1 trillion (including interest) -- the Democrats are attempting to nationalize 20% of the economy as a payoff to the SEIU bosses who contributed $27 million to Obama's 2008 campaign.

Helping a few million uninsured people get access to health insurance is a noble goal, but not at the expense of permanently destroying the United States economy. Adding entitlement programs while we can barely crawl out of the current deficit hole is suicidal behavior.

Washington must:

• Slash federal spending on needless programs
• Begin to raise the eligibility age for Medicare and Social Security
• Starting offering optional, private savings accounts to young people to eventually replace the dying Medicare and Social Security programs

The Soros- and union-funded Democrats are so far out of touch with the principles of our founding that they represent a completely anti-American movement. John F. Kennedy -- he of the tax cuts and strong national defense -- would be as reviled in the modern Democrat Party as Joe Lieberman. It's up to Republicans to lead the way.

Based upon: Tony Blankley's "Washington Is Nuts" via Mark Levin.


Pamela Zydel said...

Begin to raise the eligibility age for Medicare and Social Security

I've been saying this. Why aren't we doing it? Our life span, thank goodness, has risen, so it only makes sense to raise the retirement age, i.e. Medicare, SSA eligibility. SSA hasn't been "tweaked" since its inception, what, over 70 years ago? Common sense says it needs a change.

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