Friday, November 6, 2015

November, 2015, Part 3, Political Class Insanity: A $20 TRILLION Naitonal Debt, Msimanaging the Economy, and Giving The Iranians All That They Want

It is the start of another month which means it is time for our monthly review of the latest political class insanity that continually spews forth from America’s politicians. Their actions, words, quotes, incompetency, and general ineptness continue to reinforce our theory that we are currently being served by the worst set of politicians in the history of the nation.

As you read about the latest shenanigans and ineptness of the political class, keep in mind what should be their priorities in these difficult times and compare this list to what they are actually working on:
  • NBC recently reported that ISIS forces are getting larger and stronger despite the Obama administration spending billions of dollars on a failed air campaign and military strategy.
  • The stock market is stalling.
  • Job creation is barely keeping up with population growth.
  • Wage growth is anemic, growing just .2% in the second quarter, the lowest quarterly growth since 1982.
  • The labor participation rate is at the lowest level in decades because the Obama economy cannot generate enough jobs.
  • Thousands of veterans are still not getting the medical care they were promised by the Federal government.
  • 45 million Americans are still receiving monthly Federal food assistance.
  • Our borders still leak and thousands of illegal immigrant criminals continue to walk our streets.
  • Major programs such as Medicare, Medicaid, and Social Security are hurtling towards insolvency and lose hundreds of billions of dollars every year to fraud and mismanagement.
  • Our kids are still getting lousy public educations at most public schools.
  • The IRS and other government functions seem to be getting their computer systems hacked on a regular basis, exposing tens of millions of Americans to identity theft potential.
  • Obama Care is a failure along so many dimensions as health care costs continue to soar despite the Obama promise that they would decrease.
  • Annual Federal deficits, while down, are still about half a TRILLION a year meaning that even though the Federal government is collecting more in taxes than ever before, it still cannot run a balanced budget.
Again, keep these real crises in mind as you read what our politicians are actually doing, saying and wasting.

1) Since we started writing this blog, we have sounded the alarm of how dangerously high the Federal government’s debt level has grown over time. In less than seven years, from the start of the Obama Presidency, the national debt has risen about 80% from around $10 TRILLION to over $18 TRILLION. 

With the enactment of the latest Federal budget that Obama signed this week, it is highly likely that the national debt will hit an amazing $20 TRILLION when he leaves office in early 2017. Consider the insanity of this $20 TRILLION debt level and the ineptness of the Obama administration that got us to this dangerous place:
  • $20 TRILLION has 13 zeros in it.
  • The $20 TRILLION debt level comes out to a per household debt burden of over $170,000.
  • In other words, every American family would have to write a check for $170,000 to eliminate that debt burden.
  • At $20 TRILLION, the Obama administration would have overspent Federal revenue levels by the same amount that EVERY President cumulatively did before him. EVERY President.
  • The increased spending might have made some sense if it fulfilled Obama’s economic predictions back in 2009 but his promises of returning us to robust economic growth and reducing unemployment to 5.5% by 2012 were typical Obama promises, unfulfilled.
  • Another fulfilled economic promise was made in February 2009 when he promised: “And that’s why today I’m pledging to cut the deficit we inherited by half by the end of my first term in office. This will not be easy. It will require us to make difficult decisions and face challenges we’ve long neglected. But I refuse to leave our children with a debt that they cannot repay–and that means taking responsibility right now, in this administration, for getting our spending under control”
  • For the next four fiscal years his administration caused the national debt to grow by over $4 TRILLION when his budgets ran trillion dollars deficits for four straight years.
  • Federal government spending increased over 18% in the first four years of his administration, from $2.98 TRILLION in 2008 under Bush to an annual average of $3.53 TRILLION under Obama.
  • The national debt was 47% of the annual GDP of the country when Obama came into office to a point where the national debt will likely be a whopping 94% of the annual GDP number when he leaves office.
  • Despite spending so much money, incurring so much debt, Obama’s economic stewardship of the economy has left over 45 million Americans needing Federal food assistance every month, record low labor participation rates as Americans get too discouraged to find a good job, stagnant wages, stagnant household wealth levels, crippling student loan burdens, and anemic and record setting low economic growth. 
As always when talking about politicians and economics, difficult to see how much worse it could be if they tried to screw up when putting $10 TRILLION onto the national debt load. Insane.

2) Obama and John Kerry have been extolling the fine work they think they did in crafting a treaty with the Iranians regarding sanctions and the Iranians' desire to get their hands on nuclear weapons. We have previously discussed the reality of how stupid this agreement is for any number of reasons, reasons we will not rehash today. 

What we will review today is the insane letter that the supreme leader of Iran, Ayatollah Khamenei, sent out demanding changes to the agreement. Before reading the changes listed below, keep in mind that Obama and Kerry thought that they already had worked out the details of the agreement months ago and that the negotiating was done. Now, the Iranian leadership comes back and says to Obama and Kerry, not so fast, we have questions and demand changes to the what Obama tried to sell the country as a done deal:
  1. The U.S. and European nations must draft a letter promising to end all possibility of "sanctions snapback."
  2. The West must lift -- not "suspend" -- all sanctions immediately and permanently.
  3. The International Atomic Energy Association (IAEA) must issue an irreversible declaration ending any future investigation into alleged military dimensions of Iran's nuclear programs.
  4. Iran will postpone any renovations at its heavy water (plutonium) reactor at Arak until the signatories of the JCPOA produce an alternative usage plan.
  5. Iran will not begin shipping out of country any of its enriched uranium unless the signatories agree to deliver uranium to Iran (albeit at a lower level of enrichment).
  6. Iran demands right to implement a phased plan of centrifuge expansion to 150,000 over a period of 15 years.
  7. No sanctions are to be leveled against Iran because of alleged support for terrorism or human rights violations.
  8. Iran must be free to explore all future advances in nuclear enrichment technology.
  9. No way that Obama can claim he has an agreement with Iran when they want to make eight major, major changes to the deal. We were led to believe that the details of the agreement had already been worked out. Apparently, the Iranians do not think so.
So what does Obama do? Walk away without a deal and in his mind dent his legacy? Or buckle under and let the Iranians have everything they want? I once worked for a boss whose favorite quote was: ”Never be so in love with a deal that you cannot walk away from it.” The Iranians know that Obama is desperate for a foreign affairs legacy and will not walk away from any deal, no matter how bad it is. 

Given the insanity of this Presidency, I would bet that the supreme leader gets everything he wants and then some. 

3) One more small piece of insanity for today, more insanity to follow tomorrow and beyond. During the Obama Presidency, this administration had three very strong tailwinds that should have made managing to a robust economy very easy:
  1. He spent well over $800 billion on a so-called economic stimulus program.
  2. Record low energy costs for consumers and businesses should have diverted billions of dollars into the economy, helping its rate of growth.
  3. The Federal Reserve pumped trillions of paper dollars into the economy.
All three of these factors should have resulted in robust economic growth. But alas, they did not. The Obama administration and the rest of Washington took these tailwinds and incredibly created one of the worst economic recoveries in the history of the country. 

And the latest government estimates on economic growth confirm that this ineptness continued into the third quarter of this year. The third quarter GDP annual growth rate was estimated to be 1.5%, less than half of the average historical growth rate.

That will do it for today’s political class insanity. Mismanagement of the economy, mismanagement of the Iranian nuclear weapons deal, and mismanagement of the country’s fiscal affairs. Three strikes. More insanity tomorrow including how to work for the DEA, throw wild sex parties on the taxpayer dime, and still get bonus pay.

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