04.04.2013 original publish date
04.10.2013 update: ObamaCare to add $6.2 Trillion to the deficit
Global Debt-to-GDP Dangerous as U.S. Debt Approaches $17 Trillion
original article written by Net Advisor™
What is the U.S. doing about its ever-growing deficit? Nothing. The Obama Administration shifted to more ‘critical issues,’ such as same-sex marriage, immigration reform, restricting the Second Amendment, or who might be President in 2016. Except for perhaps major industrialized nations such as Germany and China, the world is failing to properly address their most critical issue – their fiscal house.
 The chart above depicts a list of counties whose debt has either exceeded their entire value that their respective country can produce (GDP); or their debt is nearing a risky level. Few countries have managed fiscal responsibility with taxpayer money such as Sweden, Bulgaria and Estonia.
 Democrats Suggests Minor Spending Cuts Will be Disastrous to the Economy?
The economy, jobs and the deficit all seem to be a non-issue to the Obama Administration. Government’s work on the economy has seen more action toward manipulating the monthly unemployment numbers (more reports), and manipulating the inflation numbers (additional report), than actually creating positive policies conducive to do business in America.
The mantra is ‘more government spending will grow the economy.’ Try spending more of your hard-earned money and see how your personal economy will grow. President Obama and his political followers said that any budget cuts this year would be like Financial Armageddon.
 Here are some of the news reports:
- 2013-02-05 Obama: Economy will suffer from sequester (Politico)
- 2013-02-18 57 ways sequester could sting (CNN)
- 2013-02-19 Obama warns looming sequester would devastate economy (NBC News)
- 2013-02-22 The Sequester Could Cause A Recession… (Huff Post)
- 2013-02-25 Obama says ‘give me money or I’ll give you hell’ (Examiner)
- 2013-02-26 Bernanke – Spending cuts add ‘significant’ burden to recovery (CNN)
- 2013-02-26 Budget cuts could cost nearly 800,000 jobs (CNN)
- 2013-02-28 Sequester Could Cause ‘170 Million Jobs’ … (National Review) (video, Point #8)
- 2013-02-28 GOP Forcing Women ‘To Stay in Their Homes With Their Abuser’ Because of Sequester (CNS News)
- 2013-03-01 Obama formally orders ‘deeply destructive’ cuts, blames Congress (Reuters)
 U.S. Economy Was Already Lagging in 2012
Meanwhile, despite the Washington drama over trivial sequester cuts that the President and Congress agreed to back in 2011, the U.S. economy fell behind 7 other nations in 2012.
 How Did Government Make up for $85 Billion in Sequester Cuts?
Spend Another $1 Trillion!
To make up for the $85 billion in budget cuts, the U.S. government followed up by passing a new bill to spend $1 Trillion just for 2013 (Source: Washington Times PDF). So all that drama and whining of financial disaster that would come if we cut $85 billion from the budget, was solved by spending another $1 Trillion – more than 10 times the cuts!
Mr. Obama said at his 2013 State of the Union (SOTU) speech that he would not increase the deficit by one dime this year.
“Let me repeat – nothing I’m proposing tonight should increase our deficit by a single dime. It’s not a bigger government we need…”
— Barack Obama said at the 2013 State of the Union Address
We’ll that promise lasted a whole two months.
This new (Trillion-dollar deficit) bill funds the government until September 30, 2013 when the government will run out of money again. If anyone is not sure how that will go, the debt will go up again in 2014. Just watch.
For the record, there has been no net cuts to the deficit since Obama became president. I wrote a series of 5 articles (#12-16) discussing the debate about cutting roughly $1.1 Trillion off the deficit in 2011. After all the drama, the actual amount that was cut was just $6 Billion.
The problem here is that government hasn’t cut spending at all. All they are doing is reducing the amount they are borrowing and call that deficit reduction. I covered this back in January 2010 here.
 Is the President’s “Top Priority” Really About the Economy and Jobs?
The President said that his “top priority” was the economy and jobs.
“As I said in my State of the Union Address last week, our top priority must be to do everything we can to grow the economy and create good middle-class jobs. That’s our top priority. That’s our North Star. That drives every decision we make.”
— President Barack Obama, 02-19-2013 (NBC News Video)
 Instead of Jobs, and the Economy, This is What the White House Has Really Been Doing:
- 02-15-2013 Obama Books Top Golf pro at $1,000/ Hr. on Vacation (Breitbart)
- 03-28-2013 Obama: On Gay Marriage (Huff Post Video) (MS-NBC Video)
- 03-29-2019 Obama uses executive power to move gun control agenda forward (the Hill.com).
- 03-26-2013 Obama’s averaging 1 vacation per month (Weekly Standard)
- 03-29-2013 With White House Closed, (VP) Biden Takes 3rd Vacation of 2013 (Breitbart)
- 04-01-2013 Senators close to deal…allow 11 million illegal immigrants to become U.S. citizens (Daily Mail.UK)
- 04-03-2013 Obama Presses For Gun Control In Colorado (Huff Post Video)
House Speaker, John Boener (R-OH) said the President is not showing leadership on the budget. The President has not submitted a budget as the law requires him by the first Monday in February said House Budget Committee Chairman, Paul Ryan (R-WI) (Source: USA Today / AP Video).
Washington Post journalist Ezra Klein cited the government’s real #1 focus this way:
“The overriding fact driving almost everything that happens in American politics right now is that both elections and governance are zero-sum games between the two parties: For one side to win, the other side has to lose.”
— Ezra Klein, Washington Post, 03-30-2013
In our view the President’s intent is to legalize 11 million illegals in the USA, then register them to vote for the 2014 election. The purpose here is to try and regain the House the Democrats lost big time in 2010 after ObamaCare was controversially passed.
Then with control of all three branches of government, there is nothing to stop the Progressives from issuing any kind of spending, or legislation.
The last thing to do for the politically-left, is to knock off the Supreme Court. The Court is supposed to act like an independent judiciary, but frequently, major cases have become borderline in 5-4 decisions. President Obama has already appointed two left-leaning judiciaries to the High Court. Tip the balance to the progressive-left, and America is quickly on its way like France, Spain and Greece.
Coming from an educational background doing extensive research in the social and behavioral sciences, a career in financial markets and risk management, with an ability to investigate, it’s not hard to figure out the political left’s intent. One doesn’t need this background to figure it out. Someone who can read people well with a junior high-school education can come to the same conclusion.
The key is not to get caught up in emotional speeches. Watch behavior. Remember it’s, “not what they say that counts but what they do” and “actions speak louder than words.”
For those who think America can’t become a socialized nation, its already happening (ObamaCare, Government takeover of Student Loans via Sallie Mae, Government takeover of Home Loans via Fannie Mae and Freddie Mac for example). Even the liberal British news media, the Guardian cited concerns over the attack on liberty with Obama’s NDAA Executive Order. But, let’s talk about the financial risks to America if politicians don’t get serious now.
 Obama Disbands Jobs Council
In 2011, President Obama’s announced that he was going to have a “Jobs Council.” The 26 member panel met four times since it was created and met only once in 2012. As the economy began to slow in late 2012, the President decided to disband (fire) his “Jobs Council” (Source: Fox News and Politico).
 White House Priority: Vacation Before Jobs?
Back in 2009, President Obama said he would not rest until the unemployment situation in the U.S. was fixed. Since then, Mr. Obama has been on 57 vacations since this promise about jobs, and has been on 83 vacations since becoming President.
 U.S. and EU Face Huge Economic Risks: “The Big Crash Ahead”
The U.S. might want to get its act together and take the lead and address real government reform which has been lacking for years. If the U.S. does not make smart choices now on entitlement reform (further reading) and re-address Obama’s HealthCare Costs (Official IRS PDF, see page 56, parr 3 example) and burdensome new ObamaCare rules (links below), the U.S. economy will one day face a disaster that will make the Great Depression and Great Recession feel like a kiddy ride at Disneyland.
“According to projections from the Congressional Budget Office (CBO), entitlements and ObamaCare spending will comprise 53 percent of all federal spending over the coming decade, totaling $24.9 trillion.”
I would predict if left as is, ObamaCare will drive to nationalize all healthcare as individuals will eventually no longer be able to afford the rising monthly premiums without sacrificing healthcare services (higher deductibles). The rules and regs are already burdensome.
“…new regulations are pouring out from HHS—more than 13,000 pages so far and yet nuts-and-bolts questions are still unanswered. Most of what we know so far comes from a 17-page question-and-answer document that HHS divulged this week, though none of the answers have the force of law and HHS says they’re subject to change at any moment.”
Here are Just Some of the ObamaCare New Regulations:
- 2013-03-11 HHS 45 CFR in Parts (483pps) Link only / Local PDF
- 2013-03-11 OPM 45 CFR Part 800 (154pps) Link only / Local PDF
- 2013-03-11 HHS 45 CFR Part 153 and 156 (53pps) Link only / Local PDF
- 2013-03-11 HHS 45 CFR Part 155 and 156 (26pps) Link only / Local PDF
ObamaCare to Add $6.2 Trillion to the Deficit
A January 2013 U.S. General Accountability Office (GAO) report said that the new cost of ObamaCare would add another $6.2 Trillion to the deficit (Share link only / View Full 60-page Report PDF)
The U.S. economy won’t fall apart overnight. Overtime, say perhaps the upper limit of 10-20 years (once every statute is in force), the U.S. puts itself on an evermore dangerous financial course it cannot afford. At that time, there will be little to no real choices. Government will likely raise taxes on everyone one way or another just like they did in January 2013. Government will have to cut benefits including medical and social security for many. Defense is likely to be slashed too.
All this could come to a head sooner than later. El-Erian, the Co-CEO of the world’s biggest bond fund Pimco commented on the FED’s $3 Trillion “effort to flood liquidity into the markets and reduce unemployment while stoking inflation.”
“…(The FED is) venturing deeper and deeper, using imperfect tools, and they’re not getting the response they expect…Rather than step back and ask why (the measures have not succeeded), they just go deeper and deeper,” El-Erian said.
— El-Erian, Co-CEO Pimco. Source: CNBC (PDF) 04-04-2013:
The economy has been slowing down since the fall of 2012 despite the FED’s massive trillion-dollar stimulus. The stock market at least for the Dow and the S&P are at all time highs. Inflows on money have come into the market in the latest quarter and are at nine-year highs. This tells me people are chasing returns, and we are at a near-term market top anyway.
Does this sound like an economy that is recovering?
“Employment numbers were soft this week, with jobless claims rising to 385,000 and planned layoffs surging 30 percent from a year ago. Manufacturing metrics have been stalling as well, and companies have been slashing their earnings forecasts.”
— Source: CNBC (PDF), 04-04-2013
Arguably, the stock market is looking short-term and not on the big deficit picture right now. In the future, we could be looking at unrealistic tax rates, devaluing the U.S. dollar, huge inflation, and unemployment could soar just like Spain. The U.S. debt should hit around $25 Trillion somewhere between 2020-2022 if we continue this deficit spending trend.
Speaking of Spain, they hardly get broad media coverage in the USA, so let’s see what we have to look forward to if we stay on the current path. Spain’s overall unemployment rate hit 26% in January 2013 (Source: BBC).
“This year (2013) Spain is preparing for another year of recession. Output is expected to fall after the economy worsened in the final three months of 2012 and the housing crash that wrecked the country’s banks showed no signs of abating.
Factory and energy production figures on Friday are expected to show industrial output was down 6% year on year in January. Average house prices remain 36% below their 2008 peak.
Youth unemployment, which has spurred thousands of young people to protest in Madrid’s main squares, has climbed to 56.5% without hitting a ceiling.”
— Source: Guardian.UK (PDF), 03-07-2013
Raising taxes higher and higher will not solve Washington’s spending problems. This will lead to declining consumer spending, which results in lost jobs, followed by a recession that may be so deep it could be very painful to turn that ship around.
The time to act is now. The President and his staff are not focused on the real issues that need addressing: The economy and jobs as he promised. Social issues have their merits in proper time, however they do not add to the economy which is supposedly Obama’s “top priority.”
Banning or restricting firearms, figuring whether government should reverse President Clinton‘s 1996 mandate of what the definition of marriage should be; having government leadership go on lavish and frequent vacations at taxpayer’s expense are not addressing the fundamental problems in the USA.
Nor is allowing 11 million people who are already here illegally, become “legal” and subsequently allowed to vote and get on government welfare programs will only damage the economy.
When the economy is really growing without the use of government stimulus, the unemployment rate is acceptable to historical standards, fiscal deficits are eliminated and the national debt is on a permanent path for real reduction and stabilized, then government can play Social Commander in Chief if free people are unable do that on their own.
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Short link to this article: http://www.netadvisor.org/?p=17464
Graphic credits as noted. Share graphic link U.S. Debt chart obtained from this graph (PDF). Amount of U.S. debt analysis obtained from Treasurydirect.gov (PDF). EU debt-to-GDP (2012) data obtained from this graph. U.S. basic debt graph obtained from House Committee on the Budget at House.Budget.gov (FY2014) (View local PDF of 16 graphs – share link only). “U.S. debt clock” data obtained from usdebtclock.org as of 04.03.2013 (PDF not available). Graphic debt analysis by NetAdvisor™
Other Credits: Video credit: courtesy NBC News; photo credit: Obama vacation original owner not known; ObamaCare graphic credit: Heritage.org
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