President. Obama’s second term has begun and so has the priority chase that will define his second term in office. So far, he has promised clean energy, improving the environment, energy security, further Wall Street reform, improvement in everyone’s health, but nary a serious word about getting our fiscal house in order. He says little or nothing neither about cutting real spending nor about reducing the country’s 16.4 trillion-debt load. His campaign rhetoric, effective as it was in getting him re-elected, seems to have compromised his judgment like a bacillus can compromise one’s health. He remains steadfast in his insistence that Medicare, Medicaid and Social Security benefits should not be changed. Of course they will. He acknowledges that these are the areas that are most driving our out-of-control deficit “We don’t have a spending problem,” Mr. Obama told Speaker Boehner. But if not, then we have to ask what kind of a problem do we have? Fortunately, interest rates are near zero so that the cost of interest on the national debt has not spiked up the deficit. But one wonders whether Mr. Bernanke’s policy of holding down interest rates is beginning to run out of steam. And, given the extent to which President Obama has run up annual trillion dollar deficits, when it comes time to pay the piper, every percentage point of rate increase will add over $100 billion to our deficit or to our money printing frenzy. Think of it. At historical levels of interest, we easily could be paying a half trillion dollars, or more, in annual interest alone.
The latest survey of American consumer confidence, not surprisingly, indicates that confidence has dropped to the lowest level since 2009, even though the Standard & Poor’s and the Dow indexes are setting record highs. Consumer Confidence in the United States decreased to 58.60 in January from 66.70 in December. Historically, from 1967 until 2013, the United States Consumer Confidence averaged 92.96 reaching an all time high of 144.70 in January of 2000 and a record low of 25.30 in February of 2009. We hope we are wrong but it is starting to look like the stock and bond-market stork may be bringing us a bouncing baby bubble. All of this, at least for now, signals a very tough battle ahead on deficit reduction, budget cutting, and entitlement reform. As Charles Krauthammer put it, “The only surprise is that Obama chose his second inaugural, generally an occasion for ‘malice toward none’ ecumenism, to unveil so uncompromising a left‑liberal manifesto. But this substance was no surprise. After all, Obama had unveiled his transformational agenda in his very first address to Congress four years ago (February 24, 2009).” Mr. Krauthammer further points out that he at that time said it was “the boldest social‑democratic manifesto ever issued by a U.S. president.”
Since that time the President has gone on a spree of nationalizing a good portion of the U.S. economy i.e., 18 percent of it by passing his health care plan, and an $833 billion stimulus that precipitated a huge expansion of government spending. Washington now spends 24 percent of GDP, fully one‑fifth higher than the postwar norm of 20 percent. He was slowed down, as he put it, by the “shellacking” he took in the 2010-midterm elections. But now that he has won again, the revolution has returned. His inaugural was a paean to big government, and at its heart was Obama’s pledge to defend unyieldingly the 20th‑century welfare state … expanded unrelentingly for the 21st, reports the Daily Northwestern in, of all places, Oshkosh Wisconsin. Why we cannot reform some of the entitlements of this entitlement state remains a mystery to us. Social Security was enacted in 1933 when the average lifespan of a citizen was 65. That, of course, was the time when you could begin to claim Social Security benefits. President Roosevelt was pretty shrewd; he knew that for many years to come far more would be paid in than would be paid out. In 1935 there were an estimated 37 workers for every retiree. Today, the ratio of participants in the work force to Social Security beneficiaries has shrunk to less than 3 to I and will decline even further in the next few years. Furthermore, when the Social Security program was initiated in 1935, the average life expectancy was 61 years of age. Considering that the average age for retirement has remained consistently around 65, beneficiaries in the early years of the program were, of course, receiving payment for a much shorter time. Currently, average life expectancy has increased to 75 and the average retirement age has remained at 65. So, not only are there more beneficiaries as compared to workers, but these beneficiaries are receiving payments for a much longer period of time. Hello! Is anyone in Washington ready to get serious about Social Security reform?
Now President Obama would like to, as he puts it, “heal the planet.” He promises a state‑created green‑energy sector, massively subsidized while the state’s regulatory apparatus systematically squeezes fossil fuels, killing coal today, and shale gas tomorrow.
Unbelievably enough, the United States is poised to becoming a net energy oil exporter. We need not any longer kowtow to the Saudis or any of the oil rich Middle Eastern sheikdoms that believe that they can squeeze us by manipulating their all time price‑fixing cartel to fix, the cost of a barrel of oil. But we may not become an oil exporting country, because President Obama and his allies claim that the kind of fracking and shale gas deliverables that are out there may spoil the environment. It is not the environment with which they are concerned, it is the concept of private sector growth. Growth may be good for the economy, but private sector growth is not what the left has in mind. What the left has in mind is sacrificing private-sector growth on the altar of government growth under the guise of support for the environment.
In another cynical move, the President allowed the Defense Department to save $10 billion by eliminating 10,000 marines, but found in his budget priorities, nearly half a billion dollars for support of the Muslim Brotherhood-run Egypt. To do all of these things, the President remains in campaign mode. Everyday his press secretary is out there either defending something that the President has done, or announcing yet another heroic initiative that Obama has announced., None of his priorities get to our massive debt, and, we would predict, none will.
We will learn more about the President’s priorities as his nominee for Defense Secretary, Chuck Hagel, continues to be questioned by the Senate. Mr. Hagel is a former Republican Senator and so the President obviously believes by having a Republican war veteran in his cabinet, he can hide behind his plan to reduce our defense budget. Mr. Hagel has been on record as saying that the Defense Department budget is bloated even though the current Defense Secretary, Leon Panetta, has warned about further cuts to the defense budget. Mr. Hagel has criticized the sanction regime that is in place against Iran even though Iran’s own president, the lovable Ahmadinejad, has reported to his own people in a televised address that the sanctions are biting.
One promise that Obama made during his campaign for his first term was that he intended to fundamentally change America, and fundamentally changing America is something he is well on his way to doing. He is overtaxing the nation, (and, as the country will soon learn, the middle class as well) under the guise of even‑handedness and fairness.
Last week we saw the world-class golfer Phil Mickelson announce that he is changing his residence from California to another state (presumably Florida or Nevada). He then apologized for the announcement. He shouldn’t have. Frankly, we applaud him for being honest about the fact that he, like over 100,000 other taxpayers in California last year, will take his earnings to another state that hasn’t so mismanaged its finances.
If the President’s political opposition wants to have a unified message heard by the public, they need to have a more effective spokesperson out there every day, than House Speaker John Boehner or Senate Minority Leader Mitch McConnell. The Republican Party cannot succeed by simply gumming up the works with an agenda that is little more than obstructionism. The public must understand exactly what the loyal opposition would really do to make life better for the people if it were to return to power.