Barack Obama Wants YOU --- to Pay $10,000 More To Maintain His Entitlement State

Entitlement spending is the driver of deficits, but entitlement reforms, such as raising the retirement age or converting Medicare to grants, collide with the core of liberal statist thinking. President Obama shows no sign of being willing to put entitlement reform on the table. If anything, the American Nanny State is too small. We must look to Europe to see it done right, those of the liberal persuasion believe.

The fiscal-cliff debunked Obama’s campaign myth that deficits would go away if the “rich paid their fair share.” CBO projections conclude that neither the $700 billion tax hike on the affluent nor the sequestration of discretionary spending will dent the trillion dollar annual deficits we face over the coming decade. With the Government Accountability Office declaring the current fiscal path unsustainable, the Obama administration must explain how it can contain the national debt without significant entitlement reform. So far its approach has been to pretend there is no problem.

go to forbes.com

Republicans Must Play to Win the Long Game

Barack Obama is dead set on an entitlement state of European proportions financed with trillion dollar deficits. When the deficits become unsustainable, he or his successor must either impose massive tax increases on everyone or dismantle Obama’s signal achievement: an “Entitlement America” that guarantees everyone a “decent standard of living.” Obama hopes that when the day of reckoning comes, the American public will be so hooked on entitlements that they will grudgingly accept higher taxes – a questionable proposition.

If Obama had come clean with the American public on his intentions, Mitt Romney would be President of the United States.

Obama won the election by falsely claiming, among other things, that our fiscal problems would be resolved if the rich just paid their fair share. The fiscal cliff skirmish showed otherwise, to no one’s surprise. To cite an influential Obama supporter: “Raising rates on the top 2 percent was never going to be enough anyway.” (I thought taxing the top 2 percent was supposed to solve our problems.)

 go to forbes.com

It’s Not the Tea Party Stupid: Why the Bond Market Does Not Like What It Sees

Those who blame the kamikaze, hostage-taking tea party for ruining the U.S. credit rating do not see what the bond market sees. The last-second budget deal, which was really about nickels and dimes, underscored two things:

 First, it again revealed a political system unable to address the big issues. And if it tries to address them, it is likely to make things worse.

Second, it shows a nation that is no longer able to grow itself out of fiscal difficulties.

Experts know that the deficit and debt figures tossed around in public discussion are only the tip of the iceberg. The real iceberg is the unfunded liabilities of Social Security and Medicare. Their unfunded liability is how much money we would have to set aside to meet the future obligations of these two programs.  Our national debt, which may soon reach the size of GDP (say $17 trillion), is dwarfed by the unfunded Social Security and Medicare liabilities that may have already reached $100 trillion!

The bond market is looking at our deficits and our unfunded liabilities, and it does not like what it sees.  Moreover, it sees that any and all serious attempts to deal with these fiscal problems impose huge costs on potential reformers.

As examples, I would cite:

The savaging of George Bush’s attempt at the start of his second term to reform Social Security via partial privatization.

The demogoging of Paul Ryan’s plan to salvage Medicare and Medicaid by turning it into an insurance grant program.

The passage of Obama Care under the fig leaf of a deficit reduction plan, with all parties understanding it raises unfunded liabilities.

In the past, we have been able to ameliorate deficits and unfunded liabilities by economic growth. There is now doubt as to when or whether we will return to healthy growth. We have an economy that does not lend, does not take risks, does not buy, and is strangled by regulations. We have an administration that is perceived as anti-business and more interested in redistribution than growth and efficiency. If we are doomed to European-style growth, our fiscal woes will grow worse and worse and worse.

The S&P downgrade speaks to all these concerns. It surely did not help that the Obama administration ordered the free coverage of a wide variety of women’s health costs in its latest administrative guidelines for Obama Care. As more of these administrative rulings come out, the colossal unfunded mandates of Medicare will be better understood.

If things are so bad, you might ask, why is our federal government not already paying higher interest rates? The answer is that although things are bad here, they are worse elsewhere. It is like a marathon with some of the world’s slowest runners. We are running very slow but others are slower.

That’s not the way to win a race – by relying on the ineptitude of others.