Except for possibly the most die hard Obama supporters, most Americans recognize the underlying economic misery that Obama and the entire political class has brought down on this country:
- Official unemployment rate stuck at around 9% and 14 million Americans.
- A total unemployment and underemployment rate that is much higher, placing the national labor participation rate at its lowest rate since 1983.
- National debt approaching a catastrophic $15 TRILLION.
- Consumer confidence near an all time low.
- Housing industry near an all time low.
- Millions of home foreclosures across the country.
- High gasoline prices and rising food prices.
- Trade deficits in the hundreds of billions of dollars a year.
- A huge and expensive government infrastructure (i.e. Treasury Department, Federal Reserve Board, SEC, FHA, FDIC, Fannie Mae, Freddie Mac, HUD, Senate banking and housing committees, House Of Representatives banking and housing committees, etc.) that completely failed to see and act to prevent the Great Recession.
- A massive economic stimulus program that was a massive failure.
An atrocious health care reform law that will not reform our health care processes in a positive manner but which is contributing mightily to the lack of job growth throughout the country.
Hardly a good report card on the political class economic performance. Consider what some of the private sector financial experts are saying about our economic situation:
- Economist John Hussman foresees a significant downturn in the U.S. economy in the near future: "Our broadest models (both ensembles and probit models) continue to imply a probability of an oncoming recession near 100 percent,"
- International Monetary Fund Managing Director Christine Lagarde recently warned of the risk of a “lost decade” for the global economy unless nations act together to counter threats to growth: “In our increasingly interconnected world, no country or region can go it alone. There are dark clouds gathering in the global economy.”
- Sen. Charles Grassley stated in a recent interview that the United States faces a fiscal Armageddon because of the mammoth and growing national debt.
- Harvard economic historian Niall Ferguson recently stated at a lecture at the Manhattan Institute's Wriston Lecture: "What has been characteristic of this administration is that it has never attempted to arrive at anything resembling a credible plan to restore the finances of this country to balance. The last time the Congressional Budget Office tried to project fiscal policy on the basis of current policy, what it showed was that the United States would never again this century run a balanced budget, that it would run a deficit every year until the projections peter out in the 2080s."
- According to November 9, 2011 Reuters report, the credit rating agency Moody's recently announced: "Moody's currently has a negative outlook on the United States, which means it could be the second rating agency to strip the country from its triple-A rating after Standard & Poor's."
- USAToday reported on November 10, 2011- "The housing market will need at least eight years to rid itself of the 2.1 million homes either in foreclosure or carrying seriously delinquent loans." In the same article, USAToday reported that average housing prices in October, 2011 were more than 4% less than in October, 2010, indicating further stress in the housing market.
- The United States must reduce taxes and cut government spending in spur an economic recovery, McDonald's chief executive Jim Skinner told Sky News in a television interview: "In order to create jobs in America, you're going to have to do something with the tax. You have to cut taxes . . . particularly in the business community. We pay some of the highest [corporate] taxes around the world. There needs to be some leveling."
- When asked about Federal spending, Skinner went on to tell Sky News: "It's not a good story, that's for sure. The government has to spend less."
- Former U.S. Senator Alan Simpson, one of the co-chairmen of Obama's deficit reduction commission recently stated on CNBC: "It's very simple. If you spend more than you earn, you lose your butt. The American people know the fiscal path that Washington is on is not sustainable. These deficits are like a cancer. They're going to destroy the country from within."
Mr. Simpson accurately describes what the title of this post is all about: most Americans know you cannot constantly spend more than you make, it erodes both your wealth, your credit rating, and your freedom. It seems that our politicians are the only ones that do not understand what America and the experts above do understand: economically, things are bad and getting worse.
How would ordinary Americans address the economic malaise? We get a good idea of what most of us would do from a recent opinion poll conducted across a cross section of Americans by Reason magazine (December, 2011 issue) and the Rupe organization:
- 57% of those polled believe that reducing government spending will "mostly help" the economy while only 20% or so say it will "mostly hurt" the economy.
- More than 77% support any reform that puts a spending cap on the Federal government that prevents it from spending more than it collects.
69% (50% of the 69% "strongly favor") favor a Constitutional amendment requiring a balanced budget.
- This finding is line with a recent CNN/ORC poll which showed that between 60% and 75% support a balanced budget amendment, depending on how the question is asked.
57% in the Reason-Rupe poll said that the government should focus mainly on government spending cuts to reduce the deficit with 37% who want to focus only on cutting spending with no increase in taxes.
- Only 23% wanted an equal emphasis on tax increases and spending cuts to reduce deficits.
- On a pessimistic note, 69% of those polled expect their taxes to go up in the next five years compared to only 6% who expect their taxes to go down. With the expectation of paying more in taxes, which would cause decrease household disposable income, it is not a surprise that American consumers are not spending as much, further depressing economic growth.
- On a further depressing note, of those that expect to pay more in taxes in the future, 62% believe that Congress and the political class will spend those increased taxes on new government programs, not reduce the debt of the nation or deficit spending.
- Despite what politicians say and fear, Americans are willing to accept cuts to entitlement programs as long as they get back the money they paid into the programs: 61% of those polled would accept cutbacks to current or future Social Security benefits and 59% would accept cuts to Medicare benefits, with the understanding they would at least get back what had been contributed to both programs in their names.
- Reforms of Social Security had support in the poll across all major political groups, supported by 65% of Republicans, 59% of Democrats, and 61% of Independents.
- A majority across sub-groups in the poll favored policies that would allow Americans to opt out of Social security (54%) and Medicare (56%). Thus, regular Americans are flexible and reasonable when it comes to attacking the insolvency problems facing Social Security and Medicare, a flexibility and sense of reality not present in our political class.
- As far as satisfaction with how the political class is handling the situation, and other issues, 48% of those surveyed would consider voting for a third party candidate who is economically conservative and socially liberal. Not a surprising finding since other valid opinion polls have recently shown Congressional approval ratings to be in the 10%-15% range.
- And the most depressing finding of all - 73% of those polled doubt that the Federal government, and the politicians that operate it, have the ability to solve our economic problems. This doubt is up from 52% in 2010 and way up from 41% of those surveyed in 2002.
Very depressing, not only do ordinary Americans have a better understanding of what needs to be done to fix the economy, we have less and less faith and confidence that those running the government know how to fix the problems or are willing to fix the problems. Or, as summarized in the Reason article that presented these findings, "most of those politicians are throwing up their hands (and hiding under their desks) when faced with the prospect of making hard decisions about entitlement reform." No guts, no courage, no leadership.
As with every other issue facing America today, the existing set of politicians make the idea of term limits more and more attractive and necessary. The citizens of this country, as proven in the Reason poll, understand what needs to be done to fix the economy of this country and how to keep our government and nation solvent. Our so-called leaders do not.
Thus, a Constitutional amendment is a necessary option, we need to dump out our political class on a regular basis, breaking the monopoly of do-nothing politicians that are entrenched in Washington. The alternative, do nothing, is a sure road to financial collapse and destruction of our democracy, just ask anyone (but a politician).