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Obama to the Nation: Debt, Debt and more Debt
Townhall.com ^ | January 24, 2015 | John C. Goodman

Posted on 01/24/2015 4:51:51 AM PST by Kaslin

"The shadow of crisis has passed," President Obama told us on Tuesday night. “The State of the Union is strong," he added. But is it really?

If you had accumulated a debt that is more than 20 times the size of your household income, would you say your household finances were in good shape? Well, that’s where we are as a country. Under about a dozen federal entitlement spending programs, we have made promises that we haven’t been willing to pay for. In the process, we are leaving an enormous financial burden for our children and grandchildren.

So what did the President propose to do about that problem? Basically leave well enough alone and add to it. As David Jackson reported:

Citing the legacy of programs like Social Security, Medicare and college aid, Obama told the GOP-led Congress that "middle-class economics works" and "these policies will continue to work, as long as politics don't get in the way."

The piling on includes:

… new tax breaks for child care, and programs that include two free years of community college, lower interest rates on mortgage insurance and new requirements for paid sick leave.

There are basically two kinds of debt – the kind you hear about and the kind you don’t. The first kind is federal debt held by the public in the form of government bonds. At last count these totaled a little over $13 trillion. The second kind is the difference between long term promises we have made – for retirement income, medical bills, disability payments, etc. – and the income we expect to fund those promise in the form of taxes, premium payments, etc.

That second kind of debt is huge. Boson university economist Laurence Kotlikoff pegs it at a whopping $210 trillion. Kotlikoff writes:

The fiscal gap — the difference between our government’s projected financial obligations and the present value of all projected future tax and other receipts — is, effectively, our nation’s credit card bill. Eliminating it, would require an immediate, permanent 59 percent increase in federal tax revenue. An immediate, permanent 38 percent cut in federal spending would also suffice. The longer we wait, the worse the pain. If, for example, we do nothing for 20 years, the requisite federal tax increase would be 70 percent, or the requisite spending cut, 43 percent.

By the way, to solve our fiscal problem, the 59 percent increase in taxes has to be put in the bank and invested – not spent on other things, like community college tuition -- until the day when the bills start coming due. That will require a level of discipline no previous president or congress has been able to muster.

What’s really at issue here is the difference between short term thinking and long term thinking. Take the United States and Italy. On a short term basis, our economy is in much better shape than theirs. They have 13 percent unemployment. Ours is less than 6 percent. Their outstanding debt (bonds) is 130 percent of GDP. Ours is 73 percent.

But Prof. Kotlikoff points out that on a long term basis Italy is in much better shape than we are. One way to measure the “fiscal gap” is to calculate how much a country needs to tax and save each year (as a percent of its GDP) in order to be able to meet its future spending obligations. By this measure, Italy’s fiscal gap is actually negative. In the future they will be able to lower their taxes. And the Italian figure is the lowest of 24 European nations studied! By contrast, the US fiscal gap is 10.5 percent -- higher that any European country and considerably greater the European average of 2.4 percent. (See Table 3.5 of the European Commission’s Fiscal Sustainability Report, 2012.)

In the light of all this, last night’s State of the Union address was a huge disappointment.

During the 2008 election, I was actually hopeful about Barack Obama. He was the only serious candidate in the Democratic primary who said we need to do something about entitlement spending, including Social Security, Medicare and Medicaid. For this, he took much abuse from the left, including scathing condemnation by Paul Krugman in The New York Times. Yet he stood his ground.

After the election, I became even more hopeful. When President Obama appointed Alan Simpson and Erskind Bowles to head a commission to tackle the problem of ever escalating federal debt, even the Republicans in Congress were opposed. But the president forged ahead, despite no congressional support. He met personally with Simpson and Bowles and promised them that he would back their recommendations — let the chips fall where they may.

The Simpson/Bowles recommendations were released in December 2010. But there was no meeting at the White House. In fact, the president greeted the report with stony silence. In January, 2011 there was no mention of the report in his State of the Union speech to Congress.

And there has been no mention of it ever since.


TOPICS: Editorial; Government
KEYWORDS: barack0bama; debt; stateoftheunion

1 posted on 01/24/2015 4:51:51 AM PST by Kaslin
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To: Kaslin

Both political parties have contribute to America sending a huge portion of what used to be America’s industrial base, to China and other places.

China is now the world’s leading exporter. And rapidly growing.

WE ARE THE REASON. We buy stuff, lots of stuff, from every store which was made in China.

We need to make stuff right here.

The GOP needs to do something about this. The democrats have for the last six years, been sold out.

The problem is the GOP is also sold out.

Bring back lots and lots, of American manufacturing.


2 posted on 01/24/2015 4:57:03 AM PST by Cringing Negativism Network (http://www.census.gov/foreign-trade/balance/c5700.html)
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To: Kaslin

Over the Obama years John Boehner and Mitch McConnell have helped to raise the nation’s debt ceiling over and over again.

The Republicans have also played a role and its not just about Obama.


3 posted on 01/24/2015 5:01:34 AM PST by Nextrush (OBAMACARE IS A BAILOUT FOR THE HEALTHCARE INDUSTRY)
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To: Nextrush

Thinking of the future, it would be wonderful to abort all of the giveaway programs odumbo and his ilk have created and start over. Where would you begin?


4 posted on 01/24/2015 5:52:45 AM PST by DaveA37
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To: Kaslin

Neither cutting spending nor raising taxes to the levels John Goodman recommends is ever going to happen.

No politician is going to get elected in this country promising “austerity.” Its not a word people want to hear.

People want their benefits and they want them now. And politicians do what they demand.


5 posted on 01/24/2015 6:01:43 AM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives In My Heart Forever)
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To: Kaslin

He lies.


6 posted on 01/24/2015 6:13:19 AM PST by b4its2late (A Liberal is a person who will give away everything he doesn't own.)
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To: Kaslin

Our unemployment is closer to 11%.


7 posted on 01/24/2015 6:16:46 AM PST by b4its2late (A Liberal is a person who will give away everything he doesn't own.)
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To: Nextrush

Both parties don’t want to talk about our debt.

The only way out is through a bipartisan solution.

We’re not going to get it and had this President worked to address the problem, he would have left us an admirable legacy.

Its not a road he chose to go on, instead preferring to pander to the Democratic Party’s Far Left.

Of course Obama proposed new spending since by the time the bills come due, he would no longer be in office.

So he blew an opportunity in his SOTU address to point out that our fiscal house is in a mess and we should do the right thing by our children and grandchildren and live within our means.

Families have to do it. The government should live by the same rule.


8 posted on 01/24/2015 6:17:35 AM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives In My Heart Forever)
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To: b4its2late

What else? The first word that comes out of his mouth is a lie


9 posted on 01/24/2015 6:20:55 AM PST by Kaslin (He needed the ignorant to reelect him, and he got them. Now we all have to pay the consequenses)
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To: Kaslin

Definitely. Joe Wilson was SO right!


10 posted on 01/24/2015 6:54:21 AM PST by b4its2late (A Liberal is a person who will give away everything he doesn't own.)
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To: Cringing Negativism Network
China is now the world’s leading exporter. And rapidly growing. WE ARE THE REASON. We buy stuff, lots of stuff, from every store which was made in China. We need to make stuff right here. The GOP needs to do something about this. The democrats have for the last six years, been sold out. The problem is the GOP is also sold out. Bring back lots and lots, of American manufacturing.

There are five major things that must be done to bring back manufacturing, and one has already been started.

1. Already started is low energy costs, which requires the US to be more self-sufficient by having an "all of the above" energy policy. Fracking, an abundance of natural gas, and drill baby drill, has been a huge reason energy costs have been favorable.

2. Reduce taxes on corporations. Why would anyone want to manufacture products a country with the highest corporate taxes in the industrial word? It also would hurt to change the tax policy for overseas profits, and let the money (on a one-time basis) be re-patriated.

3. Reduce the amount of senseless regulations that just kill small businesses from starting, and growing. Re-visiting our environmental Nazi-style policies is a must.

4. Tort reform is a must. For example: When a person can sue gun manufacturers because a gun was used to kill somebody, the system is broken. Jury awards are ridiculous and not based on economic damage. Remember the idiot that was awarded $60m +/- when she spilled her hot coffee from McDonalds on her lap?

and lastly,

5. Tell the unions to take a flying leap. $40 an hour plus free medical benefits and pensions to turn bolts on an assembly line almost killed the car manufacturing industry. Other businesses also suffered by being blackmailed, gangster style, into horrible labor deals.

11 posted on 01/24/2015 7:02:53 AM PST by Go Gordon (Barack McGreevey Obama)
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To: Kaslin
"The shadow of crisis has passed," President Obama told us on Tuesday night. “The State of the Union is strong,"


12 posted on 01/24/2015 7:15:02 AM PST by Elsie ( Heck is where people, who don't believe in Gosh, think they are not going...)
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To: Go Gordon

No.

I disagree. We have sent our industry to the world’s biggest communist nation.

The biggest single nation on Earth. And we are spending our very own assets, to enrich China and send manufacturing there.

It doesn’t work, the other way around. China does not send industries to America. It only absorbs them.

The GOP needs to stand up for America. Soon.

Now.


13 posted on 01/24/2015 9:13:06 AM PST by Cringing Negativism Network (http://www.census.gov/foreign-trade/balance/c5700.html)
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To: Nextrush

Nextrush wrote:
Over the Obama years John Boehner and Mitch McConnell have helped to raise the nation’s debt ceiling over and over again.The Republicans have also played a role and its not just about Obama.

What was worse than that Obama 2015 STOU. Was the direction taken by the GOPES .Not one of those half dozen so called rebuttals made after the speech by the “Republicans” dealt with, nor dared to, itemize or even chatacterize those statements as lies. And it as appears those MSM hailed replys went uncriticiized here in FR in too many postings.

The GOPES leadership (gop elite statists) learned nothing from 2012.They still seek approval from the media propaganda appar-rats which whey will never get. Believe winning political opposition strategy consists of their approach which is the use of “stand for status quo” “we can fix the bad stuff” with republican cum-by ya” will win in 2016. And not the defence of the constitution or of conservative values.

Do the GOPES actually believe they can attract disaffected dems and together we can continue on with big government merry way happily feeding off the government trough with a new UNI Party ? It seems that this is the direction they’re taking.

When what they should begin by asking the question why does the democrat (In name only, and GOPES fail to use many eamples to point that out) lie so much ? Is because they don’t believe in there is such a thing as sin because they can’t refer to God which they threw out in their 2012 convention. Hence any reference to the constitution which has that refence to HIM all over the place. Because it doesn’t fit their socialist collective agenda.


14 posted on 01/24/2015 9:22:51 AM PST by mosesdapoet (Some of my best rebuttals are in FR's along with meaningless venting no one reads.)
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To: Cringing Negativism Network

Great post. We have traded our seed corn for a gain in the stock market.


15 posted on 01/24/2015 9:23:00 AM PST by ex-snook (God forgives because God is Love)
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To: Cringing Negativism Network
I disagree. We have sent our industry to the world’s biggest communist nation.

We didn't send squat to China. Our manufacturers didn't move to China. Our retailers have tried to maximize their profits by buying cheaper goods from places like China. It simply doesn't make good business sense to buy goods from US manufacturers at a higher cost. If you level the playing field here at home, retailers would LOVE to buy USA. My previous post stands as to what has to happen to do that.

You simply can't have a government decree that says thou shalt create a manufacturing business in New Jersey regardless of whether it can be profitable. That's simply insane. The government has to get out of the way AND create a business friendly environment from which entrepreneurs can prosper. If not, get used to products from China, Taiwan and Mexico.

16 posted on 01/24/2015 2:23:26 PM PST by Go Gordon (Barack McGreevey Obama)
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To: Kaslin

Any writer who admits he was “ hopeful” about obozo in 2008 is admitting he is basically a simpleton, and loses all credibility.


17 posted on 01/24/2015 6:02:15 PM PST by Newtoidaho
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To: Newtoidaho
Any writer who admits he was “ hopeful” about obozo in 2008 is admitting he is basically a simpleton, and loses all credibility.

Likewise...

Any writer who admits he was “hopeful” about Mittin 2008, 2012 and is again in 2016 is admitting he is basically deceived, and loses all respectability.

18 posted on 01/25/2015 3:17:36 AM PST by Elsie ( Heck is where people, who don't believe in Gosh, think they are not going...)
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