is defined in simple terms as an economic or political system in which the means of producing and distributing goods is owned collectively or by a centralized that often plans and controls the economy. It is characterized by very high and tight government control over capital, natural, and human resources. When applying this definition, and considering the administration’s actions, it is hard to conclude anything other than the intent of Obama (and the later part of the Bush administration) to pursue a agenda. Indeed, every major initiative and stated goal of the administration represents a significant deviation from free market capitalism towards a society. If there is any doubt, simply consider the following actions and their associated end results:
- The Troubled Asset Relief Act (TARP) and its resulting effect of the government owning a major portion of the financial institutions. This was initiated by the Bush administration but certainly followed through by the Obama administration.
- The government bailout of the auto industry which resulted in the US government owning, and later Obama exercising considerable executive control (including selecting the CEO and arguably company board members) over General Motors.
- The American Recovery and Reinvestment Act which finds its way into so many private initiatives that they are far to numerous to list.
- The Reform Act, which aims at government control of the entire United States system which accounts for approximately 16% of the total US economy.
- The student loan program in the United States that has been surprisingly added to the Health Care Reform Act without debate or explanation.
In fact, the later years of the Bush administration also demonstrates a strong tendency toward government ownership and outrageous federal spending. When you consider the amount of spending that was allocated by our government (including the proposed health care reform spending) in the last 2 years, the totality of the magnitude is nothing short of mind boggling:
- 2008 – $30 Billion – Bear Stearns
- 2008 – $400 Billion – Fannie and Freddie Mac
- 2008 – $180 Billion – American International Group
- 2008 – $25 Billion – Auto Industry Bailout
- 2008 – $700 Billion – Troubled Asset Relief Program (TARP)
- 2008 – $280 Billion – Citigroup
- 2009 – $142 Billion – Bank of America
- 2009 – $787 Billion – American Recovery and Reinvestment Act
- 2009 – $2 Trillion – Public-Private Investment Program
- 2010 – $948 Billion – Proposed Health Care Reform Act to be spent over 10 years (most experts agree this cost to be closer to $3 trillion)
To get a complete picture of our unfunded annual obligations, we also have to consider the following line items:
$107 Trillion – Unfunded liabilities for Medicare and Social Security over the next 10 years.
$19 Trillion – Unfunded commitments made to foreign countries.
These amounts do not include the billions of dollars spent on unemployment extensions, the two wars we are fighting, foreign aid, and the enormous costs of running the US government and paying for the expansive government payroll. Interestingly, the average government employees annual salary (of almost $80,000) is approaching 2x the average private employee’s salary.
Analyzing our Nation’sin Relative Terms
Without the non-included costs, the above list includes $5.88 trillion in spending. To put this in perspective, the United States government collected less than $1.25 trillion in incomerevenue for all of 2008. Would you feel comfortable spending almost 5X your annual after tax income in a two year period?
By way of examples, if you were a high paid average government employee, keeping almost $65,000, the equivalent 2 year spending would be over $300,000! Further, given the nation’s already accumulated national debt of $11.5 trillion, you would also have a comparable $650,000 in existing debt to service the interest on and hope to eventually pay off!
Any reasonable person would conclude that someone making an $80,000 salary, keeping $65,000 after, and spending over $300,000 per year with $600,000 of debt already has an unsustainable financial problem and is far past bankrupt. This is the situation our nation now faces.
In late February of this year, President Obama was beginning to push his massive multi-trillion Heath Care Reform bill into law and he also signed a law authorizing the U.S. Treasury to borrow an additional $1.9 trillion (which had nothing to do with Health Care). The day after signing that law, President Barack Obama delivered a characteristically sanctimonious speech. The speech was nothing short than a lecture teaching all of us the wise wisdom of his ways and showing us how foolish we have been to have made all the mistakes we have. In principle, it was about his deep commitment to frugality and the shame the American people should feel because we do not share such a principle.
“After a decade of profligacy, the American people are tired of politicians who talk the talk but don’t walk the walk when it comes to fiscal responsibility,” he said. “It’s easy to get up in front of the cameras and rant against exploding deficits. What’s hard is actually getting deficits under control. But that’s what we must do. Like families across the country, we have to take responsibility for every dollar we spend.”
Over the last 50 years, the progressive agenda in this country has moved us from being a Representative Republic, which people seem to forget is the form of government our nation was structured as, to a Democracy, a form of government which lacks much successful historical precedent. Over the last 20 years, the progressive agenda in this country has moved our market system from Free Market Capitalism, the market system which has proven to promote the greatest overall prosperity, to Socialism, a market system that is often characterized with corruption and, almost without exception, has collapsed with great pain to the people who were subjected to it. While neither socialism or democracy (many people feel that these are necessarily mutually exclusive constructs of which I firmly disagree) are inherently bad, what is inherently bad is the fundamental transformation of any government or economy without the level of critical analysis or planning that such a dramatic change would warrant.
There are many reasons why we should more carefully consider the outrageous spending we have been undertaking. Some of which are moral objections as in the incredible debt burden we are leaving our children and grandchildren with which is the basis of the concept of Generational Theft. Others are the vulnerability we are exposing our currency and nation to. But an undeniable fact is that our spending has outpaced our capacity to analyze, plan, and consider the short and long term implications of the spending. Just as individual consumers get themselves into financial trouble from improper planning and not accurately assessing, or properly appreciating, the long terms effect of interest, debt, and financial instability. Just as bankruptcy courts often order consumers to undertake credit counseling as part of the bankruptcy process; our Federal Government may be in great need of credit counseling itself.
If it is the will of the people that we sway more towards socialism and a pure democracy then so be it; as ours is a nation by the people and for the people. But if we take these steps without due regard for long terms impacts or critical analysis of possible unintended consequences, then shame on us all.
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