America's Fiscal Crisis: Tough Decisions Needed Now

Includes: DIA, QQQ, SPY
by: James Quinn

I love America. That is why I am so disillusioned by what our "leaders" have done to our great country. I use the term "leaders" loosely. Dr. Howard Gardner defines a leader as, "an individual (or, rarely, a set of individuals) who significantly affects the thoughts, feelings, and/or behaviors of a significant number of individuals." The reason we are in our current predicament is because, "We the people" have elected politicians rather than leaders. Merriam-Webster's dictionary defines a politician as "a person primarily interested in political office for selfish or other narrow usually short-sighted reasons."

The people we have elected to Congress and the Presidency are politicians who are more concerned with their own re-election, maintaining power, and enrichment of their financial backers than they are about our great country. Our great leaders included: George Washington, Benjamin Franklin, Abraham Lincoln, Franklin D. Roosevelt, John F. Kennedy, and Ronald Reagan. A true leader tells the American people what we need to hear and is able to convince us to change our behavior. Our current cast of politicians, tell us what we want to hear based on polls that tell them how to best get re-elected. They spend our children’s future by dishing out election-year rebate bribes and foreclosure bailout schemes for votes. The only two people that I have seen on the political scene today who show the characteristics of true leadership are Ron Paul and David Walker.

Ron Paul has been a Congressman from Texas for 20 years. He ran for President as a Republican. The Republican establishment despises him because he has been against the Iraq invasion from the beginning. The Conservative media tried to trivialize and demean his positions. It is these conservatives who have sold out. Ron Paul is a true social and fiscal conservative. His consistent principles and moral backbone should be an example to all conservatives. I am a registered Republican and consider myself a fiscal conservative and social conservative. After 8 years of Republican control of the Presidency and 6 years controlling Congress, I’ll provide a scorecard of the results most important to the average American as of today:


You have to admit, this is quite a success story. I doubt that President Bush will be considered in the list of our greatest leaders. He is more likely to be lumped with such distinguished Presidents as Herbert Hoover and James Buchanan. He has single-handedly destroyed our fiscal situation by spending like a drunken sailor. The difference is that drunken sailors spent their own money. George Bush spent our money and borrowed the rest from the Chinese to pay for his wars. His spending and Alan Greenspan’s mismanagement of interest rates have led to our current situation. With the current bunch of imbecile politicians running this country, a Depression is a distinct possibility. If they start putting up barriers to free trade, we could relive the 1930’s.

In the data above, you may have noticed that the CPI has only increased by 30% in eight years. How could this be when energy costs are up over 100% and food is up over 50%? It is because the government manipulates the CPI in order to make it lower. Again, we have Alan Greenspan to thank. He is a very smart manipulative man. He realized that Social Security obligations will bankrupt the country. Social Security payments are increased by CPI every year. By artificially reducing the CPI, he has reduced the government debt by billions. Below is a chart that gives the true picture of inflation today.

If the CPI was calculated the same way it was when Paul Volker was the Federal Reserve Chairman, then we currently have 12% inflation, versus the 4% reported by our government. Which rate seems right to you? While the average American is struggling to educate their children, save for retirement, take care of their aging parents, and generally get ahead, the Treasury Secretary and Federal Reserve Chairman have been busy propping up bankrupt financial institutions who made billions in the last 8 years while paying their "Masters of the Universe" leaders hundreds of millions in salary and bonuses. Guess what they are using to prop up these bankrupt institutions? That’s right, our money. My money, your money, your children’s money, and your grandchildren’s money.

Of course, this is small potatoes compared to the current and future costs of Bush’s wars and the unfunded liabilities created by our politicians over the years in order to win re-election. According to Paul Craig Roberts, former Assistant Secretary of the Treasury under Ronald Reagan, the cost of the Iraq war has been north of $600 billion and does not include the replacement cost of the destroyed equipment, the future costs of care for veterans, and the cost of interest paid to the Chinese to finance the war. Joseph Stiglitz, Nobel Prize winning Princeton economist, estimates that the war will cost $5 trillion by 2017, including $800 billion of interest paid on the money borrowed to finance the war. If I recall correctly, Dick Cheney and Donald Rumsfeld told the country that the war would cost $50 billion and that the future Iraq oil revenues would be used to pay us back. Were they being dishonest or could they have miscalculated by such an enormous margin? Larry Lindsey, a Bush economic advisor who suggested that the total cost of the war could be $100 billion in 2002, was fired shortly thereafter.

The human cost of the Iraq war is the most tragic, in my opinion. President Bush chose to put our troops in harm’s way and more than 4,000 souls have sacrificed their lives, while over 30,000 have been wounded. The tragedy is that no one needed to die or be wounded. There were no weapons of mass destruction, no links to 9/11, no relationship with Al Qaeda. Dick Cheney and Donald Rumsfeld decided in September 2001 that we would go to war with Iraq. The neo-cons were looking for any excuse to attack Iraq. Therefore, they trumped up the intelligence reports to support their case. How many lives have been ruined (mothers losing their sons, wives losing their husbands, children losing their fathers) for the sake of a political agenda. I hope Bush, Cheney and Rumsfeld sleep well at night with all of that blood on their hands.

Representative from Texas, Dr. Ron Paul, was one of only a few brave Republicans to vote against the Iraq War. He was ridiculed for this during the Republican Presidential debates. But, who is ridiculous? John McCain says we will stay in Iraq for 100 years. Ron Paul has pointed out the absurdity of what has happened in Iraq. First, we blew up all of the Iraqi bridges with cruise missiles. Then we borrowed billions from the Chinese to rebuild the Iraqi bridges. Meanwhile, bridges in the United States are collapsing and thousands of our bridges are rated structurally deficient. David Walker, former Comptroller General of the United States, has warned that the current unfunded liability for future Social Security and Medicare payments is $53 trillion, or $455,000 per household. This unfunded liability increases by $7 billion per day. To quote Mr. Walker,

"We are mortgaging the future of our children and grandchildren at record rates, and that is not only an issue of fiscal irresponsibility, it’s an issue of immorality."

There is no denying the facts represented in the following chart:

The Federal debt has risen from $542 billion to more than $9 trillion since 1975. Debt as a percentage of GDP, once at 35%, is now above 60%. This is not a situation that will resolve itself gradually. A dramatic change is needed within the next 10 years to save this country from permanent economic decline. Currently, each of your tax dollars goes to the following governmental programs:

We have a limited number of choices. We can either accept huge tax increases which would depress our economy or cut spending somewhere. The interest on the debt will continue to grow as long as we run deficits. We spend $12 billion per month on the wars in Iraq and Afghanistan. The only reasonable financial solution to this crisis is what has been advocated by Ron Paul. Stop our empire building and bring our troops home from across the globe. President Eisenhower warned the country in 1960 about the rise of the military industrial complex. The Government Accountability Office just reported that 95 US major weapons systems have exceeded their original budgets by $295 billion, bringing their total costs to $1.6 trillion, and are two years late on average. We would save $1 trillion per year, by bringing our troops home from throughout the world. That could be used to fund our Social Security and Medicare liabilities for our elderly, fix our infrastructure, fund our energy independence initiatives, and pay down our national debt. The great empires of Rome and Britain were not defeated militarily, they went broke. We have a choice. Continue on our current unsustainable track or take dramatic action now.

David Walker has recently resigned from his position as Comptroller of the U.S. to become CEO of the Peterson Foundation. Pete Peterson was Secretary of Commerce under Richard Nixon. The Foundation’s mission is to enhance public understanding of the nature and urgency of selected key sustainability challenges that threaten America’s future, to propose sensible and workable solutions to address these challenges and to build public will to do something about them. These issues include: unsustainable entitlement benefits, unsustainable deficits and unsustainable healthcare costs. Pete Peterson is a Republican. His view on the Bush tax cuts in his own words is, "When we sit around here and talk about all these tax cuts and we say it's our money, your money and mine, I think we ought to be honest with the American people. In the first place, it's also our debt and it's our children's debt. But secondly, a tax cut isn't really a tax cut long-term unless you reduce spending. Because then it becomes a tax increase on your children. So we're inflicting this awful bill not simply on ourselves but most importantly on our kids. And it is that phenomenon that is very troublesome."

In conclusion, I wanted to provide a quote from Ron Paul that sums up our situation. In November 2007 Congressman Paul said the following to Ben Bernanke during Congressional hearings, "We’re indeed stuck between a rock and a hard place, and we don’t talk about how we got here; we talk about how we are going to patch it up. The solutions proposed so far – stimulus packages, bailouts and interest rate cuts – just amount to printing more money, which will lead to greater currency devaluation, contribute to the rising cost of living, and further squeeze the middle class and our senior citizens." Ron Paul and David Walker are honest, straightforward, brave men who have the best interest of our country at heart, versus the selfish agendas of our political leaders. I urge everyone to listen to the brave men and women who are willing to stand up to the special interests and lifetime politicians and bureaucrats in Washington.