I received the following in an email from someone who sees things somewhat differently than I do.
“So, in 2016, when all of these predictions are incorrect and the economy has been righted, will the GOP and its supporters, like you, own up to being wrong?”
So, I am pounding a stake into the ground on this one and announce to anybody that is still crazy enough to read my meanderings that I will track the accuracy of this prediction by my liberal friend. I will come back to this point periodically when it seems pertinent and verify if what my friend has predicted about the economy will materialize or if what I claim to know is true. I will also add that Mr. Obama stated his fix for the economy was a one-term deal and that if his stimulus package was passed it would right the ship of the economy. What happened?
A caveat is in order: Mr. Obama can turn things around on this, the economy, that is, if he were to change his economic strategies. This I know, however, no country in history has ever spent itself into prosperity.
Allow me to make two points that are integral to my understanding on this matter.
Point one: In 1937 unemployment was still above where it had started in 1930 and Henry Morgenthau, Franklin Roosevelt’s Treasury secretary, was pressuring FDR to balance the budget. Mr. Morgenthau said he believed recovery “depended on the willingness of business to increase investments, and this in turn was a function of business confidence… (and) only a balanced budget could sustain that confidence.” While Roosevelt did comply on spending the situation was further complicated by increasing taxes including the imposition of the payroll tax. More recession followed and unemployment went into double digits again for the next two years. Unemployment finally found high single digits again in 1940 and then we went to war finally putting the depression to bed. Some people who are ignorant of history seem to think that Mr. Roosevelt’s New Deal and his disastrous economic policies saved the country. In fact, in May of 1939, Mr. Morgenthau was quoted saying, “No, gentlemen, we have tried spending money. We are spending more than we have ever spent before and it does not work...I say after eight years of this administration we have just as much unemployment as when we started." (Actually, slightly more.)
For Point Two, a further building on Point One, consider this recent parlay:
Al Hunt from Bloomberg TV while interviewing our Secretary of the Treasury, Tim Geithner, asked if Mr. Geithner agreed with Alan Greenspan saying “that we should just eliminate the debt ceiling?” Mr. Geithner replied, “Oh, absolutely…It would have been time a long time ago to eliminate it…the sooner the better.”
Let’s take a minute to understand something about the man who serves at the pleasure of Mr. Obama as the Secretary of the Treasury of the United States of America. From 2001 through 2004, Mr. Geithner was employed outside of the country by the International Monetary Fund. As an international entity, the IMF does not withhold what are called payroll taxes, i.e., Social Security taxes, from its employees. The employees of the IMF are, in fact, responsible for meeting their own tax obligations, a fact that is very well known by all in the employ of the IMF. Every year IMF employees receive and sign paperwork issued by the IMF acknowledging their “self-employment tax obligation.” A 2006 IRS audit covering the years 2003 and 2004 found that Mr. Geithner failed to pay his self-employment taxes. Mr. Geithner thus paid his back taxes (2003 and 2004) with interest to the tune of $17,230. Unfortunately, these were not the only tax mistakes Mr. Geithner made. Mr. Geithner had also failed to pay his 2001 and 2002 self-employment taxes but these were not part of the original investigation. Somehow, his uncovered mistakes of 2003 and 2004 did nothing to stir his memory about the two preceding years. In fact, only after being informed that he was to be Obama’s nomination for Treasury Secretary in 2008 did Mr. Geithner go back and amend his 2001 and 2002 tax returns and pay up the $25,970 in back taxes and interest he owed.
Mr. Obama and others seemed not too concerned with this oversight and concluded that these were honest mistakes…I could accept that if such mistakes were made by you or me. Consider that the Treasury Secretary has oversight of the IRS therefore Mr. Geithner is the chief tax collector. Note that Geithner was previously a senior official in the Treasury Department under Bill Clinton in the 1990s. Additionally, in 2008, at the time his nomination was announced, Mr. Geithner was in his fifth year as President of the Federal Reserve Bank of New York. Mr. Geithner’s tax mistakes were not those that occurred in one year as you or I might be expected to experience. These were mistakes that spanned 4 years and strain credibility when it is remembered that Mr. Geithner was considered a finance expert having already worked for the Treasury Department. Additionally, when the first audit occurred and nailed him for his mistakes in 2003 and 2004, why did he not man-up and disclose his mistakes in 2001 and 2002? Why was a nomination vetting process required for him to own up to his tax evasion?
This is the same man who is going to be instrumental in pulling us out of our economic doldrums? And part of his plan is to just keep raising the debt ceiling; in fact, things would work so much better, in his opinion, if we got rid of any restrictions on government borrowing altogether.
Can someone please help me understand why one would want to implement a debt ceiling in the first place?
Is it possible to run your household or your retirement when you think that continued borrowing is the answer to what you need? How large a debt-to-income ratio would the bank allow you to run up while continuing to borrow and only pay interest? (BTW, interest is at record lows and when it rises to normal levels, oh well, something’s going to hit the fan pretty hard and it’s going to get all over everybody.) What will we do when our interest payment equals our revenue intake? I believe it is already approaching the half way mark. Imagine half of your paycheck going for interest on your loans. How long could you continue to borrow under those circumstances?
In 1971 gasoline was $0.36 to $0.40 per gallon and a loaf of bread was $0.25. Gold was going for $35 per ounce but some think it was underpriced and was worth about $103 per ounce in 1971 dollars. Fast forward to 2012; gasoline, somewhat watered down and mixed with ethyl alcohol, in NJ is about $3.50 per gallon, bread, depending on your tastes, can go for anywhere between $2 to $4 dollars a loaf, and the spot price of gold as I write is $1,729 per troy ounce. Given those disparities, gasoline is pretty affordable right now. Gas is up about 900 percent, bread is up anywhere from 1400 to 1500 percent, and gold (from $103) is up about 1600 percent (using $35 per ounce gold yields a 4900 percent gain).
What is it that has made “real things” more expensive while the worth of the dollar has collapsed? Someone has commented that the United States government has found a way to make a perfectly useful commodity worthless…by printing dollar bills on paper. Maybe you should ask Mr. Obama why he continues to authorize the printing presses to print dollar bills out of thin air or Mr. Geithner who thinks that there should be no limit to our debt ceiling why the dollar bills in your pockets are so worthless.
Like a broken record, the president has continued to call for more taxes on the rich, a strategy that will effectively do nothing with regard to the problem of our Deficient Spending and if anything will stifle the investment needed for economic recovery while, at the behest of our “most brilliant” economic minds (Greenspan and Geithner), we proceed to spend our way into oblivion as if borrowing and printing money was the way out of anything.
In conclusion, “…in 2016, when all of these predictions are incorrect and the economy has been righted…” What? This I gotta see.