Whenever the Federal Government spends more than it collects in taxes, that difference is called the federal “deficit.” As these deficits mount up year after year, their total is called the “National Debt.” During the eight years of the Bush Presidency the national debt increased by $2.5 trillion. The 2009 budget, for which Bush and Obama must share responsibility, will add an additional $2.6 trillion in public debt. President Obama’s budget will add an additional $4.9 trillion in public debt from the beginning of 2010 through 2016. To put this in perspective, the entire US economy produces about $13 trillion a year.

Where will the federal government get this money that it doesn’t have? There are only two options to handle federal deficits; the federal government can (1) borrow the money or it can (2) print the money. Let’s briefly examine both of those options.

When deficits occur the US treasury realizes that the Congress has committed it to spend more than it will collect in tax revenues. The treasury borrows the difference by selling US bonds to American citizens, foreign governments and other investors. The US government pays interest on those bonds, competing with other borrowers for limited funds. This drives up interest rates in the US economy, which eventually causes recessions and unemployment.

Printing money (now called “quantitative easing”) occurs when the Federal Reserve System buys back from lenders US bonds or corporate tarp money debt by simply increasing the checking account balances of the lenders. By making these bookkeeping entries, the Federal Reserve System isn’t running the printing presses, but the effect is exactly the same; the government “prints” money to pay back its debts. This is the classic definition of inflation.

According to an article in the May 26, 2009 Financial Times by Stanford Economist John Taylor, under President Obama the federal debt is exploding. If it stays at the levels projected, the outcome will be devastating for our economy, threatening our republic. Click HERE to see Taylor’s article.

To quote Taylor: “The deficit in 2019 is expected by the CBO to be $1,200bn (€859bn, £754bn). Income tax revenues are expected to be about $2,000bn that year, so a permanent 60 per cent across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP?

Inflation will do it. But how much? To bring the debt-to-GDP ratio down to the same level as at the end of 2008 would take a doubling of prices. That 100 per cent increase would make nominal GDP twice as high and thus cut the debt-to-GDP ratio in half, back to 41 from 82 per cent. A 100 per cent increase in the price level means about 10 per cent inflation for 10 years. But it would not be that smooth – probably more like the great inflation of the late 1960s and 1970s with boom followed by bust and recession every three or four years, and a successively higher inflation rate after each recession.”

Wonderful; if we don’t drastically reduce the spending plans of the federal government, we’ll have the choice of a 60% tax increase or a doubling of prices. Is this the America in which you want to live?

Government spending needs to be curtailed at once before it is too late. We have become a nation of over-schooled, un-educated fools who believe that government has the answer to all of the world’s problems. We have elected people to serve us in Washington who are, simply, separated from reality.

The average person knows in his heart that no person (or government) can spend more than it produces for very long without serious consequences. Nothing can be consumed unless someone produces it. The old saying is true; there is no free lunch! It is time for citizen legislators, not professional politicians, to run the country again. We need term limits. We need balanced federal budgets. We need to stop this madness of nationalizing banks, insurance companies, and automobile companies and return to the private enterprise that made us the most prosperous country on earth. We are on a very dangerous path that, if followed much further, will lead to our fiscal and political ruin.

In the state of Minnesota the political process usually works like this:

1. The legislature convenes and passes few mundane laws. They put off the budget issues as long as possible.
2. Time passes and the legislators are not able to balance the state budget. Democrats don’t want to make budget cuts and Republicans don’t want to raise taxes.
3. In the last 24 hours before the official end of the legislative session, when legislators are tired and frustrated, most of the issues are banged out…rather badly, but the legislature still can’t balance the budget. Government shutdowns are threatened. Screaming is heard from frustrated politicians.
4. The legislature goes into special session for 3 to 10 extra days, deciding to increase government spending even more. Finally they balance the budget (which, by the way, is mandated).

This year it was different. Minnesota Governor Tim Pawlenty shocked gopher state politics by announcing that the session would end on time, he would veto any tax increases, there would be no shutdown of state government, and if the legislators couldn’t come up with enough spending cuts to balance the budget, he would use his line item veto to make the cuts himself.

The Democrats screamed that babies and the elderly would die due to health care cuts. School administrators and teachers union officials said that children would suffer due to education cuts. Social workers would have to be laid off. University Chancellors told lawmakers that the quality of research and teaching would decline. Mayors and county government administrators testified that reductions in local government revenues coming from St. Paul would be catastrophic, as they would have to slash city and county spending. The shrill screams of government officials, government worker unions, and everyone who might be affected by revenue cuts could be heard all over Minnesota. While the democrats claimed that Pawlenty will be cutting $3 billion worth of spending, this is a ruse. The $3 billion is the difference between the state’s revenue and the amount that democrats wanted to spend.

In reality, after Pawlenty makes his cuts, the state of Minnesota will spend just 3% less than it spent last year. Apparently, democrats don’t think that government can afford to live on 97% of what it had last year. In this recession, many Minnesotans would be happy to have 97% of what they had last year. How dare we ask the state of Minnesota to make such a large 3% sacrifice!

Because the legislature was unable or unwilling to do what was right, Pawlenty will roll up his sleeves, get out his line item veto pen and make the cuts. For once, the Minnesota legislature ended its business on time, with no special session. The state of Minnesota remains open for business. Pawlenty knows that the state of Minnesota doesn’t have a revenue problem, but a spending problem. This year he will balance the Minnesota budget with spending cuts. Game over. How refreshing.

There is a government spending epidemic in the United States. Rather than relying on individual responsibility and hard work, we have decided that government entitlement programs are the answer to nearly every social and economic problem. Our politicians have responded accordingly by spending every nickel that they collect from individuals and businesses. As the economy grows and tax revenues increase, government spending at the local, state, and federal level increases predictably; there is seemingly no constraint on government spending. When a recession occurs and those “evil capitalists” lose money, they lay off employees. Both corporate tax revenues and personal income taxes shrink, leaving government short; but only because spending was so high in the first place. Despite the recession, politicians find it hard to break it’s addiction to spending.

This year the Federal Government will borrow 46 cents out of every dollar it spends, but the Father, Son and Holy Ghost (Obama, Pelosi and Reid) continue to spend, nationalize industries, and regulate this economy into the dirt. Unfortunately the “Spending Flu” wasn’t quarantined in Washington D.C. California is virtually bankrupt and will ask for Obama bailout money. Chicago’s city government is a fiscal nightmare, with the highest sales taxes and gasoline taxes in the country. Despite their cataclysmic fiscal problems, Chicago politicians still suffer from the delusion that they can afford to host the 2016 Olympic Games!

This week in one state, one politician had the guts to at least temporarily put an end to the madness. Regardless of his political aspirations, Pawlenty got this one right. He’s realized that there is only one rational and sustainable way for governments at all levels to balance their budgets…CUT SPENDING!

Comment: Recent readers may not know that occasionally I depart from personal/political commentary and write about one of my favorite characters from my fictional town of Hubbard, Wisconsin. Sadly, I’ve neglected Hubbard and its residents, as the last letter from Hubbard was written on January 12, 2008. If you want to catch up, just click on “Hubbard, Wisconsin” under the “Categories” heading in the left toolbar; there you will find all 33 episodes.

Dave Takes Joy in Spring

Even though it is May 15th, the temperature in Hubbard, Wisconsin has lingered in the high fifties with brisk winds. It doesn’t yet feel like summer, which explains why the faded blue sweatshirt remains hanging on the rusty hook on Dave’s back porch. Up in northern Wisconsin it actually snowed an inch on Thursday which makes it even harder for Dave to accept the concept of global warming. It’s been a darned long winter. Friday was a day for Dave to celebrate the rights of spring, which in Wisconsin means that it’s time to put away the winter contraptions and get out the summer stuff.

First on Dave’s list were the snow blowers. There’s the 20 year-old, rusty 4-horse single stage blower that Dave takes to Chicago each winter, only to be hauled back to Hubbard for maintenance after the last snow falls in the windy city. Then there’s the fancy, almost new two-stage, 12-horse Simplicity blower which works overtime in Hubbard’s harsh winters. Dave tuned up both blowers and filled their crank cases with new 5W-30 oil. Fuel stabilizer was added to the gasoline to insure that both blowers will start next December when they rightfully re-assert their claim as the most important pieces of mechanized equipment on the face of the earth. Dave puts a little piece of masking tape on the handle of each blower, writing on the tape that the oil was changed and fuel stabilized on May 15, 2009. In past seasons, when Dave has not placed a note on the blowers, he has forgotten whether he did it or not. Forgetfulness is a hazard when you become 40 years older than your oldest snow blower!

Then it was down to the shed to check out the 17-foot Alumicraft fishing boat and the two Polaris jet-skis. It is often said that the happiest two days in the life of a boat owner is the day he buys the boat and the day he sells it. Dave is reminded of this as he tries to start the jet-skis. Neither one of them makes a sound when the start button is pushed, despite the fact that the guys in the marina installed some chargers that were supposed to keep the batteries ready all winter. The batteries probably froze solid during the winter, even though the chargers were plugged in. That means a couple of new batteries again this year. Looks like It is time for Dave to have a “come to Jesus meeting” with the friendly guy down at the marina. Fortunately, the old 35 horse mariner attached to the Alumicraft kicks right over. If only Dave were a better fisherman!

Now it is time to go back into the garage and make sure the other three “summer” tools are working properly. The Stihl gas-powered hedge trimmer kicks right off. This machine will cut your arm off if you’re not careful, but it can make quick work of a hedge. Dave didn’t even know they made gas-powered hedge trimmers until he saw some Mexican landscapers carving up hedges in Chicago. By the time he had driven back to Hubbard Dave just knew he had to get one of those “kick-ass” machines. He hasn’t been disappointed.

The mulching mower wouldn’t start. After pulling the starter cord back umpteen times, not a pop came from the supposedly fancy 4-cyle, overhead cam Honda engine. Dave took the mower over to Jimbo’s place. Jimbo is one of those quiet, unassuming guys that works out of his garage. If it has a small gasoline engine attached to it, Jimbo can fix it. In Dave’s mind Jimbo is a genius and Jimbo’s outspoken dislike of government at the federal, state and local levels gives Dave another reason to like him. The bad news was that Jimbo had so many mowers backlogged that he couldn’t look at Dave’s mower for three weeks. After some nagging from Dave, Jimbo smacked the Honda carburetor with a small hammer. This “un-stuck” the carburetor needle and the thing kicked right over. Jimbo wouldn’t take any money because it took only a second to “tap” on the carburetor. Dave reprimanded Jimbo for not taking the money, telling him that “It isn’t banging on the engine that counts; it’s knowing where to smack it.”

At the end of the day, Dave went back to the garage to find the Stihl weed wacker. This is a commercial unit costing around $500, and Dave has had it for years. It is his pride and joy! After searching the garage for about 20 minutes, Dave couldn’t find it. He went to the shed, to the rental garage unit next door, and even down to the basement looking for the darned thing. He looked everywhere but his underwear drawer! His precious weed wacker had disappeared! Dave thought: “Who would break into the garage and take my weed wacker? Did I loan it to anyone? Ah, what the heck, even if I did loan it to someone, I wouldn’t remember who borrowed it.” After stewing about his “stolen” weed wacker and losing a few hours sleep, Dave was resigned to the fact that it was gone forever. The next morning he found it in the garage, propped up in front of a window where he had left it last fall. He must have walked by it 5 times and never seen it. “Ah, the world is good! I’ve got my weed wacker back!” said Dave.

Spring is a wonderful time of year. For many, spring joy is a hike in the woods to hunt for morel mushrooms or to gaze at wildflowers. For Dave, it’s a fresh oil stain on his overalls and the wonderful, distinctive smell of gasoline on his hands. It’s the fresh scab on his knuckle that split when his wrench slipped off the oil drain plug. It’s the leaky hose that he will fix on Tuesday and the awnings that will go on the windows next week. Alas, spring joy is in the eye of the beholder!

I’ve got some statistics to share with you about gun violence in the United States. Did you know that for the first 10 months of 2008 that 31,110 Americans were killed by guns? That’s 104 Americans dying each day, or 726 people each week. That’s the equivalent of two 747 jet airplanes crashing and killing all of their passengers and crew each week! Why isn’t someone doing something about Gun Violence? People who use these guns are crazy. If we take away their guns they won’t kill people. The logic is simple. Guns kill 726 people each week. People who use guns to kill their fellow human beings must be nuts. If we get rid of the guns, we stop the violence!

Oops! Sorry, I made a mistake. The above statistics aren’t for gun violence, but for automobile deaths. The numbers (National Highway Traffic Safety Administration) are for fatalities caused by automobiles from January through October, 2008 in the United States. But it shouldn’t make any difference, the logic should still hold true. Why isn’t someone doing something about Automobile Violence? People who use automobiles are crazy. If we take away their automobiles they won’t kill people. The logic is simple. Automobiles kill 726 people each week. People who use automobiles to kill their fellow human beings must be nuts. If we get rid of automobiles, we stop the violence!

Funny, but I don’t know of any groups getting broad based press coverage who want to ban automobiles, despite the fact that running a 3,500 pound chuck of metal down a street is a very dangerous activity indeed.

Like guns, automobiles are even more dangerous when used by stupid people. This week in Chicago a female motorcyclist was waiting for a red light to change when she was rear-ended by a Chevy impala traveling at a high rate of speed. The motorcyclist was killed instantly. When questioned by police, the driver of the automobile explained that she was painting her fingernails while driving and did not notice the light was red.

The number of people killed by guns in the United States is roughly the same as those killed by automobiles. However, 57% of gun inflicted deaths are suicides (men prefer guns, women prefer poison). Homicides account for 37% of gun inflicted deaths, while only 2.7% of all firearm deaths are accidental.

We live in a society that values both automobiles and guns. Owners of cars believe that automobile transportation is vitally important to them and to the country. I think they are correct. Likewise, owners of guns believe that firearms are vitally important to them and to our legacy of freedom. Again, I agree. Use of either guns or automobiles involves a high degree of risk. Any rational person who picks up a firearm does so with extreme care and heightened mental awareness, yet people routinely drive automobiles while using cell phones. On average, why can’t drivers of automobiles exercise the same degree of care and attention as those who handle firearms?

Everyone knows that the Iraq war is Bush’s war. Even I would agree with that, although Nancy Pelosi and a bunch of Democrats also supported going into Iraq. Even though Obama will significantly ramp up our troop levels in Afghanistan and escalate the Afghan war, it isn’t his fault; the War in Afghanistan will always be Bush’s war. The Bush Administration, in its last days, agreed to print $300 billion of taxpayer (TARP) money for the banking industry. Since taking office, Obama and the democrats have approved over $3 trillion for additional bailouts…but it was Bush that started the whole thing. Although Pelosi and Barbara Boxer were briefed on intelligence specifics, the torture (water boarding) of Islamic terrorists is, of course, a war crime and Bush and Cheney should be taken to den Haag and tried immediately.

Oh, by the way, CIA intelligence operatives who reside in run down countries and risk their lives on a daily basis to gather crucial information for the United States of America are now targets of the Obama administration. It is going to do a lot for the morale of our intelligence community if we drag back these brave operatives to be tried and punished in the U.S. One last thing; the recession is also Bush’s fault, in case you were ill informed.

Meanwhile, the press is just gaga over Obama. Once in a while, while flipping channels to find a good baseball game, I end up briefly watching Keith Oberman or Rachael Maddow. All I see is video clip after video clip of George Bush trying to put a sentence together! Hey, the guy is an easy target and I can’t blame them for knocking him down, but five months after the election, isn’t it time to move on? During an April 30, 2009 press conference celebrating the savior’s 100th day in office, Jeff Zeleny, a reporter from the New York Times asked the President what has most ““surprised,” “enchanted,” “humbled” and “troubled” him during his first 100 days in office. I didn’t know they played softball in the newsroom of the New York Times. God forbid they ask him about his plans to socialize healthcare or inquire as to whether anyone in his cabinet has even ten minutes business experience, let alone knowing anything about running an auto company.

If every bad event that happened during the Bush administration is Bush’s fault, then perhaps we should extend the same courtesy to our great leader. It looks like the swine flu outbreak started at a massive hog-raising operation in Perote, Mexico, a joint venture partially owned by a U.S. company called Smithfield farms. Let’s see; if the Wall Street financial collapse was due to lax financial regulations of the Bush administration, the swine flu outbreak had to be a direct result of lax health and safety regulations of the Obama administration, which failed to adequately regulate a U.S. company operating in Mexico. Therefore, the swine flu should properly be called the “Obama” flu. Every death from this terrible scourge, whether in Mexico, the United States, Asia, or Europe, should be on the head of Obama. Maybe Obama should go to den Haag to be tried for endangering the health and safety of the world’s population.

Now that Arlen Specter has decided to become a democrat (again) and “freaky” Frankin will shortly join him in the U.S. Senate, Republicans will no longer be able to enact a filibuster. The Democrats now have free reign on new legislation for at least the next two years. Obama has made it clear; from now on the new “winners” in our country will be chosen on the basis of need and “justice” (whatever that is); not on the basis of productivity or excellence. We’re heading down a long, slippery, socialist slope, deviating from the principals of individual freedom that have enabled us to become a great and prosperous country.