State of Union Speech Shows Obama
Seeking Utter Dominance of AWI
In the good old days, the so-called “Misery Index” (MI) was achieved by adding the unemployment rate to the inflation rate. Notable, for example, was President Jimmy Carter inheriting Gerald Ford’s 13.45 misery index and then handing off a staggering 20.76 misery index to Reagan. The term “stagflation” was invented to describe the particular type of mess that Carter had generated with his big government policies. Reagan in turn handed off a relatively low 9.57 misery index to his former Vice President G.H.W. Bush. By the way, the only reason Carter got off so well is that the Democrats were keeping the stats and didn’t admit that inflation was 19% when he left office.
Rajjpuut would like to submit for contemplation, however, the far more sensitive and indicative AWI or “Absolute Wretchedness Index” created by adding the weekly interest on the REAL NATIONAL DEBT (RND) to the Misery Index. Currently the nation’s REAL NATIONAL DEBT based upon a National Debt of $14.1 TRillion and UNfunded liabilities (just in Social Security, Medicare and the federal side of Medicaid) amounting to $114.6 TRillion equals a grand total of . . . (Drum-roll, Maestro please . . . ) $128.7 TRillion. Welfare costs are another huge UNfunded outlay which the nation is obligated to cover, but the math gets too complicated so let’s stick with a current RND of $128.7 TRillion. That means the weekly interest on a Real National Debt would amount to $ 73 Billion or about $250 per week per American man, woman or child . . . not the debt itself, just the interest we pay on it . . . so with 9.5% unemployment and .4% inflation and $73 Billion weekly RND interest rates Mr. Obama’s current Absolute Wretchedness Index stands at 82.9 easily the worst in history. His predecessor George W. Bush’s highest AWI reading was 72.6. The closest thing we see to Obama’s 82.9 AWI is Carter’s at roughly 76.6.
For those who decry any measurement system which disparages the noble contributions of that stalwart statesman Barack Hussein Obama, perhaps a little deeper study is required. While we appreciate that it’s just not cool to talk about esoteric subjects like having revenues meet obligations, according to information found in a book recently written by a former Comptroller General of the United States (Comeback America: Turning the Country Around and Restoring Fiscal Responsibility by David M. Walker) at the time he wrote his book the National Debt was about 5.5 times our income (the revenues of the nation). So considering our UNfunded liabilities as well as the debt, our obligations are now more than fifty times our revenues. We have thus severely mortgaged the country’s future and our children’s, grandchildren’s and great grandchildren’s future all the while facing a markedly different world in which America no longer has a virtual monopoly on desired goods and services and technologies but every year faces more and more serious competition in the global marketplace. Current taxes are one thing, but if we don’t start reducing our debt and the interest on the debt, then deferred taxes will destroy the nation. Let’s be clear on this: future taxes could triple and we’d still have trouble paying off both the interest on the National Debt and our future now UNfunded liabilities. That is, unless we do something NOW, everyone in the future would be taxed 100% of earnings and we still could not pay off either debt interest or obligations . . . and, of course we would have zero dollars for Defense or any other budget item . . . and still would not be dealing with the debt itself (again, just the interest).
How far in the future are we talking about? Within 12 or 13 years the interest on the National Debt will be the single largest item in the nation’s budget unless current trends change dramatically. And you get absolutely nothing in return for it, all this interest we pay . . . hence we’ve named this measure of problematical agony: the Absolute Wretchedness Index or AWI. 50% of this money is owed to foreign governments with China being #1 and Japan #2 in holding our debt; a bloc of oil producing nations combined hold’s the #3 amount. This is a crucial factor. Why did we back Freddie Mac and Fannie Mae with $5 TRillion? Because foreign debtors demanded it, since they held so much of these U.S. debt instruments.
The problem has two components, but despite all our current “pain,” only one of them matters. In the short term due to the economy, our two wars, and unemployment things are going to be painful . . . but this is a small drop in a huge ocean. The main component is the long-term structural imbalance. The budget and the deficits and the debt and the interest payments on the debt which are NOT sustainable. Once the economy recovers we get out of the wars and finally see 5% unemployment again . . . things will be even worse because we’ll have continued on several more years increasing the debt; the interest on that new higher debt; and all our UNfunded liabilities as well. Huge unending deficits, year after year, as far as the eye can see will still loom ahead of us. It is this structural imbalance that threatens to destroy the country . . . hence our headline “State of Union Speech Shows Obama Seeking Utter Dominance of AWI.”
Mr. Obama has, in real terms not in CBO configurations, increased the federal budget 41% if Obamacare and his other initivatives are considered. Now he talks about freezing discretionary federal spending at this super-elevated level for three years. What utter nonsense that pretense of his amounts to. We must begin to slash spending immediately towards 2006 or even 2004 levels. If we don’t we will lose the confidence of foreign lenders and find ourselves floating down the proverbial open sewer lacking a paddle or other means of locomotion other than our own hands as the dollar drops precipitously, interest rates and inflation soar, and our mild recession becomes a real depression and we see truly scary unemployment. Walker in his book called Washington “a lagging indicator” meaning that the politicians in their ivory towers and the political class who adore them aren’t getting the picture nearly as rapidly or as clearly as the people now do.
It is the people, the voters, who are demanding something be done about these problems even if the solution is arduous and unpopular among politicians and their allies with a vested interest in the current unstainable structure. The current Obama administration and the Democratic majorities they had in Congress have called the TEA Party movement “astroturf” rather than a true grassroots movement; accused them of being merely a more rightwing version of the Republican Party; and shown them no respect at all. Many of the current Republicans, such as John McCain’s daughter, lightweight pundit and columnist for The Daily Beast Meghan McCain, are proving just as blind about the TEA (Taxed Enough Already or Taken Enough Abuse?) Party as the Democrats. Ms. McCain objected to the TEA Party’s Michelle Bachmann commenting on Obama’s State of the Union address in addition to the Republican response so ably handled by Rep. Paul Ryan, saying, Bachmann was “at best a poor man’s Sarah Palin.”
Ms. McCain, whose only accomplishment in life is being the daughter of a famous man, ought to show a little respect when she’s talking about her elders and about a woman of true accomplishment. As Walker’s book points out, the people are aroused now and Ms. Bachmann, Sen. Paul and Sen. DeMint recognize it even if she can’t.
Let’s give you a real blast from the past when Time Magazine which loved Jimmy Carter finally had to admit things were none too rosy in their March 24, 1980 edition . . . .
"As Jimmy Carter stepped before the television cameras in the East Room of the White House last Friday, his task was not just to proclaim another new anti-inflation program but to calm a national alarm that had begun to border on panic. Inflation and interest rates, both topping 18%, are so far beyond anything that Americans have experienced in peacetime—and so far beyond anything that U.S. financial markets are set up to handle—as to inspire a contagion of fear. Usually confident businessmen and bankers have begun talking of Latin American-style hyperinflation, financial collapse, major bankruptcies, a drastic drop in the American standard of living."
We’ve heard plenty of talk about Obama’s and Bernanke sooner or later handing us a hyper-inflation and moving America toward Banana Republic Status so it appears history if it’s not repeating itself is at least humming the same rhyming song. Knowing that lesson in absolutely wretched history, let us pray not repeat it. Instead let us be pro-active in the Reagan sense and severely constraining the parasitic government, let us unleash the free market by cutting debt**; cutting spending; cutting taxes; cutting regulation; and ultimately under-cutting unemployment.
Ya’all live long, strong and ornery,
** actually Reagan’s negative legacy is the mountain of debt he handed us because dominated by Democratic congresses the welfare state continued to expand even during his eight years.