Part 2 - Rebuttal to State of the Union

To continue with yesterday’s discussion regarding the debt, yes it has gone up with Obama, mainly because of the fight against terrorism that resulted from the 9/11/01 attacks and increases in unemployment because companies won’t hire. Since 2001 not only did our budget increase but the US share of the global tourist industry shrunk 6% costing hundreds of thousands of jobs and revenue. On January 27, 2012 it was reported that although we had a 2.8% growth and consumer spending, companies are holding onto their profits until they see a 4.5% or 5% growth before hiring more people. An example of this is WalMart; we heard they redirected the store greeters to pointing out open cashiers; at least they didn’t lay people off like others did. I checked the Forbes’ 2011 list of billionaires and found 3 WalMart family members; if you totaled their net worth they had more money than Bill Gates who is the second richest person in the world.

A New York Times article on December 27 said - Since President Obama took office, the debt has shot up 42 percent, to the current level of $15.1 trillion. Of that amount, $10.4 trillion is borrowed from the public, and $4.7 trillion consists of special-issue Treasury securities held by Social Security and other government trust funds. I was glad to hear we borrow from ourselves. When Obama took office the debt was $10.9 trillion, this is an increase of $4.2 trillion and not quadrupled as in the Reagan/Bush era before Clinton’s time. Yes, on January 3 it was reported that the President is seeking to raise the debt limit by $1.2 trillion to initiate a jobs bill to entice the private sector to hire, make changes in education, and protect Americans from fraud and more. However, a December 27, 2011 Bloomberg article by Daniel Kruger called ‘Obama Wins Most Demand for Debt of U.S. Presidents Since Before First Bush’ said - The U.S. government received record demand for its bonds in 2011, pushing longer-maturity Treasuries to their best performance since 1995 in a sign that President Barack Obama may have little difficulty financing a fourth consecutive year of $1 trillion budget deficits. The spreading sovereign debt crisis in Europe and slower global growth are driving investors to the safety of U.S. assets, helping to contain borrowing costs and making it cheaper as a percentage of gross domestic product to finance deficits than when the nation last had budget surpluses. The dollar is poised to strengthen for a second straight year against its major trading partners, appreciating 1.2 percent as measured by Intercontinental Exchange Inc.’s Dollar Index. The gauge rose 1.5 percent in 2010. “The U.S. is benefiting from a very unstable global environment,” Scott Graham, the head of government bond trading at the Bank of Montreal’s BMO Capital Markets unit in Chicago, a primary dealer, said in a Dec. 21 telephone interview. “At some point you’d think demand would wane if Europe gets settled.” This report implies that the tragedy in Europe is strengthening our economy. 

Governor Daniels is right that this generation has a less promising future than their parents did. But, he fails to point out that this is contingent on things remaining as they are. You have to remember that the President has been trying since September 2011 to get Congress to give him a jobs bill and if they would do so things would dramatically turn around. The Republican candidates have said we can’t compete with China and others with a poor infrastructure and yet they fail to pass a jobs bill to improve it. On January 20 it was reported that we have 4 million miles of roads, American roads rank 20^th behind Malaysia and Cypress and they are the cause of almost half the accidents; the road warriors (the nation’s mayors) want to know if people are willing to pay a half cent in sales tax to get roads fixed and get companies to form partnerships (in Philadelphia a company sign leases to operate 5 skating rinks that the city was going to have to close). The mayors of Philadelphia, Pennsylvania, Los Angeles, California and Mesa, Arizona were on the program call themselves the mod squad of politics, they say mayors are doers and they want to see the same with the feds. On January 24 I heard Dylan Ratigan, he has a show on MSNBC, discuss his bestseller book - Greedy Bastard$; it’s about how our government bows to bankers and corporate billionaires. Dylan went on about the financial system built over the last 2 decades by both parties; saying we’re arguing about whether to kick the can with a $4 trillion plan or burn the thing down to the ground – both of them are reckless, irresponsible and stupid; he said we have 2 sets of rules (what Romney and Gingrich did was legal and this should make us all realize that we need change). He said you have to have investment and it’s based on the tax code, trade policy and banking policy. Banks aren’t lending in the US, trade agreements have to bring money to the US and the tax code needs to be fair and encourage people to invest. There are no heroes or villains in this, we all have to align together to get both parties to give us the debates we deserve. He said the 3 things that have to happen to have a prosperous America are: solve the housing problem by writing down the debt (people are immobilized, they can’t move from one place to another to get a job); revamp the tax code and have trade plans to encourage long term investment in America (example: trade agreements of the 1990s allowed China to tax us 25% on exports while we taxed them 2.5% on imports); and change the way you allocate resources (he pointed out that 5% of the people are responsible for 50% of our health costs and if you help the 5% you can collapse (reduce) the cost and nobody suffers if you put the money where it’s needed instead of willy-nilly. In my opinion, this is somewhat what the President is trying to do.