For­get kids — to­day’s debt hurts adults

Over­spend­ing is de­press­ing econ­omy

The Washington Times Daily - - Opinion - By Deroy Murdock By Don­ald Lambro

Fis­cal con­ser­va­tives un­wit­tingly sab­o­tage them­selves by in­vok­ing “the chil­dren” when ex­plain­ing the dan­gers of Amer­ica’s bal­loon­ing na­tional debt. They should spend lots more time dis­cussing how fed­eral red ink harms adults to­day.

Ty­ing debt re­duc­tion to par­ent­ing causes two prob­lems: First, if Amer­ica’s chil­dren will pay off the na­tional debt, why sweat it now? Washington’s spenda­holics will em­brace any avail­able ex­cuse to keep fed­eral spend­ing grind­ing on­ward. If the debt will vex the kids, it clearly needs no at­ten­tion for an­other decade, maybe two. So un­til then, let’s party.

Sec­ond, mil­lions of Amer­i­can adults lack chil­dren. Some have not had them. Oth­ers don’t want them. While speeches about “the chil­dren” may play moms and dads like fid­dles, they barely pluck the heart­strings of the child­less.

Free mar­ke­teers, thus, should add a badly needed note of ur­gency to their over­tures on the na­tional debt. Cur­rent and pre­vi­ous fed­eral bor­row­ing hurts Amer­i­can adults — and this en­tire econ­omy — right now, well be­fore lit­tle Johnny and Sally turn 21, find jobs and start sign­ing the tab for Washington’s end­less fis­cal happy hour. For now, the good times are rolling.

Af­ter the Bush ad­min­is­tra­tion’s fis­cal bac­cha­nal, the gross na­tional debt was $10.6 tril­lion when Pres­i­dent Obama took of­fice. To­day, that fig­ure is $15.4 tril­lion — and climb­ing. It likely will crash through to­day’s $16.4 tril­lion debt ceil­ing in mid-oc­to­ber, weeks be­fore the Novem­ber elec­tions. Ac­cord­ing to the Con­gres­sional Bud­get Of­fice (CBO), the debt will to­tal $21.7 tril­lion in 2022.

Ser­vic­ing this debt will be a mas­sive na­tional en­ter­prise. Net in­ter­est pay­ments will soar from $224 bil­lion to $624 bil­lion in 2022 alone. Over the next 10 years, the CBO projects, in­ter­est to bond­hold­ers will cost $4.25 tril­lion. This is nearly dou­ble the ex­pected bud­get for Oba­macare.

“This debt cloud over our econ­omy is de­press­ing growth right now,” said Sen. Jeff Ses­sions of Alabama, the Se­nate Bud­get Com­mit­tee’s top Re­pub­li­can. Mr. Ses­sions cites econ­o­mists Car­men Rein­hart of the Univer­sity of Mary­land and Ken­neth Ro­goff of Har­vard. They de­ter­mined that ad­vanced na­tions with debt-to- GDP (gross do­mes­tic prod­uct) ra­tios above 90 per­cent ex­pe­ri­ence 1 per­cent to 2 per­cent lower me­dian growth rates. Slower growth means fewer jobs, lower in­comes and grim­mer peo­ple. Amer­ica’s debt-toGDP ra­tio equals 105 per­cent to­day, well within that dan­ger zone. Mr. Obama’s bud­get keeps that fig­ure above 102 per­cent through 2022.

“The na­tion’s debt is lead­ing to higher costs for busi­nesses and Amer­i­can house­holds to ob­tain long-term credit,” Mr. Ses­sions’ bud­get an­a­lysts re­ported in May. “Longer-term in­ter­est rates would be even lower to­day, and more stim­u­lat­ing of eco­nomic ac­tiv­ity, if to­day’s deficit and gov­ern­ment debt were lower.”

Fed­eral Re­serve Chair­man Ben S. Ber­nanke also sees the na­tional debt men­ac­ing to­day’s adults. “Ex­pec­ta­tions of large and in­creas­ing deficits in the fu­ture could in­hibit cur­rent house­hold and busi­ness spend­ing,” he said in Oc­to­ber 2010, “for ex­am­ple, by re­duc­ing con­fi­dence in the longer-term prospects for the econ­omy or by in­creas­ing un­cer­tainty about fu­ture tax bur­dens and gov­ern­ment spend­ing — and thus re­strain the re­cov­ery.”

Washington will not get se­ri­ous about any of this un­til Democrats grow up.

Mr. Obama’s deficit pro­jec­tions ex­ceed $575 bil­lion ev­ery year through 2022. Even af­ter propos­ing a $1.9 tril­lion tax hike, he never comes close to bal­anc­ing the bud­get.

When House Bud­get Com­mit­tee Chair­man Paul Ryan, Wis­con­sin Re­pub­li­can, asked Trea­sury Sec­re­tary Ti­mothy F. Gei­th­ner how he would cure this debt headache, Mr. Gei­th­ner sniffed: “We’re not com­ing be­fore you to say we have a de­fin­i­tive so­lu­tion to our long-term prob­lem. What we do know is we don’t like yours.”

House Repub­li­cans last year passed Mr. Ryan’s sober, debt-curb­ing bud­get. The Demo­cratic Se­nate then sand­bagged it. As for 2012, “We don’t need to bring a bud­get to the floor this year,” de­clared Se­nate Ma­jor­ity Leader Harry Reid, Ne­vada Demo­crat. Why start now? In se­rial vi­o­la­tion of the Con­gres­sional Bud­get Act, the Demo­cratic Se­nate last passed a bud­get on April 29, 2009.

Debt-weary Amer­i­cans who worry about “the chil­dren” should start fret­ting about Washington’s in­fan­tile Democrats.

Pres­i­dent Obama may be get­ting great plea­sure from the Repub­li­cans’ length­en­ing bat­tle over who can beat him in Novem­ber. But he faces a much stronger op­po­nent be­tween now and then: a weak­ened U.S. econ­omy.

The news me­dia plays up the least lit­tle sign that the Obama econ­omy may be im­prov­ing slowly, but af­ter three in­suf­fer­able years of high un­em­ploy­ment and a still-sub­par yearover-year eco­nomic growth rate, he has yet to con­vince a ma­jor­ity of Amer­i­cans that he has re­stored the econ­omy to health and pros­per­ity.

The 3 per­cent fourth-quar­ter growth rate in the na­tion’s gross do­mes­tic prod­uct was wel­come news, but the fact is that the Obama econ­omy grew at a slug­gish 1.7 per­cent for all of 2011.

It isn’t ex­pected to do a great deal bet­ter this year, ei­ther, ac­cord­ing to the Na­tional As­so­ci­a­tion for Busi­ness Eco­nom­ics. The as­so­ci­a­tion is pre­dict­ing just mod­est growth of 2.4 per­cent for the rest of this year.

Amer­i­cans may not fol­low the eco­nomic growth rate that closely, but they do fol­low the un­em­ploy­ment rate, which has al­ways been a lag­ging eco­nomic in­di­ca­tor. That, in the end, may be Mr. Obama’s po­lit­i­cal un­do­ing in the fall.

The gov­ern­ment’s un­em­ploy­ment rate, which has to be taken with a large grain of salt, is 8.3 per­cent. But daily sur­veys con­ducted by the Gallup Poll put the job­less rate at 9 per­cent, and worse, the “un­der­em­ploy­ment rate” that in­cludes peo­ple who can’t find full-time work or have dropped out of the work force at 19 per­cent.

In­de­pen­dent econ­o­mists also think the gov­ern­ment’s sta­tis­tics un­der­count the real un­em­ploy­ment rate. “But for an alarm­ing in­crease in prime­work­ing-age adults choos­ing not to look for work, un­em­ploy­ment would be 13 per­cent,” says Univer­sity of Mary­land busi­ness econ­o­mist Peter Morici.

In an­other gloomy eco­nomic fore­cast, Fed­eral Re­serve Chair­man Ben S. Ber­nanke told law­mak­ers Wed­nes­day that the na­tion still faced ma­jor eco­nomic and fis­cal chal­lenges be­fore it was go­ing to fully re­gain its health.

“The un­em­ploy­ment rate re­mains el­e­vated, long-term un­em­ploy­ment is still near record lev­els, and the num­ber of per­sons work­ing part time for eco­nomic rea­sons is very high,” Mr. Ber­nanke told the House Fi­nan­cial Ser­vices Com­mit­tee.

He re­it­er­ated that the un­em­ploy­ment rate isn’t likely to drop much more than it has so far and that any fur­ther de­cline will “edge down only slowly in com­ing years.”

If Mr. Obama is hop­ing the un­em­ploy­ment rate will fall grad­u­ally over the year and lift his chances for a sec­ond term, Fed fore­cast­ers threw cold water on that no­tion.

They are pre­dict­ing that the un­em­ploy­ment rate will still be be­tween 8.2 per­cent and 8.5 per­cent at the end of this year.

The Na­tional As­so­ci­a­tion for Busi­ness Eco­nom­ics, in a re­port Mon­day, said it, too, ex­pected un­em­ploy­ment to re­main stuck at 8.3 per­cent for the rest of 2012. And it does not see the econ­omy grow­ing by more than a lack­lus­ter 2.4 per­cent for the year. Not a pretty picture for Mr. Obama or for mil­lions of be­lea­guered, job­less Amer­i­cans.

The White House knows full well that no pres­i­dent since the Great De­pres­sion has won a sec­ond term when the na­tional job­less rate has been above 8 per­cent.

This will come as a shock to for­mer Penn­syl­va­nia Sen. Rick San­to­rum, who lately has been em­pha­siz­ing so­cial, cul­tural and re­li­gious is­sues in his cam­paign for the GOP nom­i­na­tion, but a re­cent Gallup poll shows those are not big con­cerns of the Amer­i­can peo­ple right now.

“More than 9 in 10 U.S. reg­is­tered vot­ers say the econ­omy is ex­tremely (45 per­cent) or very im­por­tant (47 per­cent) to their vote in this year’s pres­i­den­tial elec­tion,” Gallup re­ported Wed­nes­day.

“Un­em­ploy­ment, the fed­eral bud­get deficit and the 2010 health care law also rank near the top of the list of nine is­sues tested” in a Feb. 16-19 USA To­day/gallup poll.

“Vot­ers rate so­cial is­sues such as abor­tion and gay mar­riage” — among the is­sues that Mr. San­to­rum has made the cen­ter­piece of his cam­paign — “as the least im­por­tant,” Gallup said.

Ter­ror­ism and na­tional se­cu­rity, taxes, and the gap be­tween rich and poor also rank higher than so­cial is­sues, which fell to the bot­tom of Gallup’s sur­vey with 15 per­cent rat­ing them “ex­tremely im­por­tant” and 23 per­cent “very im­por­tant.”

Mr. San­to­rum has been em­pha­siz­ing these is­sues in his cam­paign re­marks in the past few weeks in an ap­peal to the large evan­gel­i­cal vote that plays a heavy role in GOP elec­tions. But Gallup’s poll num­bers show that eco­nomic is­sues not only rank at the top of voter con­cerns but also rank high among all party groups, “with roughly 9 in 10 Democrats, in­de­pen­dents and Repub­li­cans rat­ing it as ex­tremely or very im­por­tant to their vote.”

That spells bad news for Mr. Obama if the econ­omy does not sig­nif­i­cantly im­prove in the months ahead. There are, to be sure, in­di­ca­tions of some eco­nomic gains here and there: the de­cline in job­less ben­e­fits in re­cent weeks, a rally in the stock mar­ket and an uptick in monthly job-cre­ation num­bers.

But thus far, none of that has re­sulted in any sig­nif­i­cant move­ment in Mr. Obama’s job scores. Gallup’s na­tional daily sur­veys put his job-ap­proval rat­ing at a dis­mal 46 per­cent Thurs­day, with 49 per­cent dis­ap­prov­ing.

In its “trial heat” head-to­head matchup polls among the two front-run­ners for the GOP nom­i­na­tion, Mitt Rom­ney led Mr. Obama by 50 per­cent to 46 per­cent. The pres­i­dent barely edged Mr. San­to­rum by a ra­zor-thin 49 per­cent to 48 per­cent.

These num­bers show that Mr. Obama has a long way to go if he is to con­vince a ma­jor­ity of Amer­i­cans they are a bet­ter off to­day than they were be­fore his pres­i­dency.

With Mr. Obama’s bloated bud­get turn­ing in its fourth tril­lion-dol­lar-plus deficit, gas prices soar­ing to $4 a gal­lon and high un­em­ploy­ment as far as the eye can see, that’s a very hard sale to make.

IL­LUS­TRA­TION BY KEVIN KRENECK

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.