As Barack Obama held his first press conference in months to promote his new $50 billion economic payback to unions, it bears reading a little-known reports from the Congressional Budget Office admitting out-of-control spending is leading us perilously close to a Greek-style meltdown. CNSNews.com has uncovered an obscure CBO report from July that states, “Combined with an unfavorable long-term budget outlook,” a double dip recession “would increase the probability of a fiscal crisis for the United States.” (Read the whole report here.)
That sounds somewhat antiseptic. Bill Clinton never saw a problem he did not label a “crisis.” But by “fiscal crisis,” the CBO means a replication of the collapse of Greece or Ireland.
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What does the CBO view as the driver of this Greek tragedy? Unsustainable debt levels driven by massive government spending.
Obama has added more to the national deficit in 19 months than in the first 200 years of U.S. history. That’s more than every president from George Washington until Ronald Reagan, more than the New Deal and the Great Society, and more than every war from 1812 to the fall of the Berlin Wall. And what do we have to show for it? This: (Article continues after image.)
The report states a PIGS collapse — where lenders would no longer be willing to finance U.S. debt — could come upon us without much advance warning. The report states: “there is no identifiable tipping point of debt relative to GDP indicating that a crisis is likely or imminent. But all else being equal, the higher the debt, the greater the risk of such a crisis.”
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And more debt is precisely where we are heading, by design. While American families tighten their belts, Obama recently hiked the salaries of two million federal employees. He has pushed through ObamaCare, whose long-term insolvency will not be seen because of accounting tricks built into its launch. And after an $800 billion stimulus that failed to stimulate and a “Cash for Clunkers” program that backfired, he is pushing more of the same.
New spending is not the lone threat. The likelihood of the dollar losing its value is all-too-real. China has called for replacing the dollar with a new world reserve currency for two years. Russia and the IMF seem to be on board. And the United Nations has agreed. This year’s UN World Economic and Social Survey declared flatly: “The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency.” Any shift away from the dollar as the world’s reserve currency would cause a further, massive devaluation of an already shrinking dollar.
This could be exacerbated if the federal government decides to cope with the crisis by printing paper money, according to the CBO report.
Meanwhile, American savings rates are at an all-time low. Lending is stagnant. Skyrocketing illegal immigration has led to such an impasse that one county alone is spending $52 million a month on welfare for illegal aliens. Meanwhile, liberals who tell us we are not “paying our fair share” are in arrears to the IRS themselves. The Los Angeles Times reported today no fewer than 41 Obama administration officials owe back taxes totaling $831,000. Tallying up just a few federal agencies, the Times finds our ruling class owes the government more than $69 million.
Unfortunately, the private sector gets no reprieve from job-killing taxes. That means the second condition for Athens riots sweeping America — a double dip recession — is more likely.
The only workable alternative the CBO report offers is “austerity.” That means cutting government spending. Democrats are wedded to spending increases. Certain Republicans since Jack Kemp have been averse to cutting spending. But the CBO shows America has no other alternative, short of a financial conflagration that could end our 100 year experiment as a world’s superpower.
Obama will not and cannot make the changes needed. He is constitutionally incapable of clear economic thinking, and it appears he will not fake right with any structural change even out of craven political expediency. It seems America’s best hope lies in bringing Ronald Reagan’s wisdom up-to-date: “A recession is when your neighbor loses his job. A depression is when you lose yours. And recovery is when Barack Obama loses his.”