If there ever was a poster child for bureaucratic inefficiency and incompetence, it is the U.S. Postal System. The ungainly appratatus stands as an example of what happens when a pseudo-government agency attempts to operate as a public enterprise using unsound business practices while ignoring market trends.
By its own admission, the Post Office is awash in red ink. Postmaster General Patrick Donahoe estimates the service will lose a record $8 billion in the current fiscal year that ends in September. Over the next decade, the losses could approach a budget-crippling $238 billion.
The Postal Service generates income by selling stamps and services to cover its costs. The agency currently receives no federal subsidies. However, with fewer people using the mail, revenues are sinking. In most recent fiscal quarter, the agency posted a $3.1 billion loss.
That doesn't even begin to describe the system's financial headaches. Next month the Postal Service is expected to default on a $5.5 billion health benefit prepayment required by federal law. The agency is unable to meet the obligation by borrowing money because it has reached its $15 billion limit, making default likely unless Congress or the government rescues the service.
In its review of the system, the Government Accountability Office (GAO) revealed that the current business model used by the Post Office is "not viable". The audit, released in June, called for deeper cuts in jobs and wages in light of the 25 percent decline in first class mail over the past decade.
In summarizing its findings, the GAO cautioned that without drastic revisions, the Post Office's staggering losses will increase. The calls for reform have gone largely ignored, although Donahue deserves credit for at least trying to whittle away at the bloated payroll.
His efforts have been opposed at every turn by the powerful National Association of Letter Carriers (NALC). A union official recently wailed that his organization will "vehemently oppose any attempt to destroy the collective bargaining rights of postal workers."
The union wants to protect every one of the current 563,400 postal jobs. Donahoe has raised the union's ire by calling for a reduction of 220,000 union employees as part of his plan for shuttering 3,650 post offices, many in rural locations. The postal chief also wants to end Saturday mail delivery, which would save $3 billion annually.
Republicans in Congress are growing impatient with the impasse. Led by California Rep. Darrell Issa, the GOP is considering legislation to rein in health benefits, reduce payroll and force changes to the pension fund covering 480,000 retired postal employees. That has set off a firestorm of protests among union officials, who complained that "crushing postal workers and slashing service" will not solve the system's financial crisis.
Democrats have been quick to come to the aid of the beleaguered union. Democrat Tom Carper who chairs the Senate subcommittee overseeing the post office, has voiced concern over whether the proposals "would be fair to employees." Carper is only protecting his party's interests. Postal unions have overwhelmingly supported Democrat candidates, including Obama in the 2008 presidential election.
That fact undoubtedly explains why the president's proposed 2012 budget included a whopping $11 billion bailout gift-wrapped for the Postal Service. The union was appropriately moved. "We're pleased that the Obama Administration seems to recognize the seriousness of the Postal Service's financial condition..." a union official chirped. News coverage of the proposed financial relief has been nonexistent.
Taxpayer funds won't fix this financial mess. If the Postal System were a "real" business, it would have long ago filed for bankruptcy. Washington needs to compell the system to exit the postal business, leaving the market to private companies to serve.
Sunday, August 28, 2011
Sunday, August 21, 2011
Warning: Obamacare Contains Unhealthy Surprises
After another stinging legal defeat, President Obama's massive health care law has been placed on life support. The latest blow came when the 11th Circuit Court of Appeals ruled that the provision mandating government insurance coverage is unconstitutional.
Despite this and two other legal setbacks, the Obama Administration continues to snub the courts, instead quietly amassing the bureaucracy needed to oversee the gargantuan government program. Payrolls are being fattened at both the Internal Revenue Service and the Health and Human Services Department in anticipation of implementation.
Because of the government's stealth approach, most Americans are unaware of the pervasive bureaucracy that will be required to administer federal health care. If the U.S. Post Office employs more than one-half million people, how many government workers will be needed to oversee a trillion dollar health care program?
No answer has been forthcoming from the Obama Administration. Whatever the number, the bureaucracy will require round-the-clock feeding from the government trough. Not to worry because the feds have grand plans to raid your wallet beginning less than two years from now in 2013.
The implementation date was selected by the Democrat controlled House and Senate in 2010 to save Obama from having to defend unpopular taxes during the presidential campaign next year. Shortly after the election, the government will usher in the New Year with a hodgepodge of new taxes aimed at raising more than $503 billion over six years.
An increase in payroll taxes for businesses and individuals will be one of the first to be unleashed beginning in 2013. The current payroll tax of 1.45 percent will almost double to 2.35 percent for individuals making more than $200,000 annually. This tax has been part of the Social Security and Medicare deductions on most individuals' checks.
While this tax targets upper income earners, it is likely to include more middle income families. If history is any indication, entitlement expenses always grow faster than Treasury's revenues, making it unlikely any taxpayers will be spared from paying for the imposing government scheme.
In addition, the health care revision mandates payroll tax rates will apply to investment income, including capital gains, stock dividends, rents and royalties in 2013. This marks the first time in U.S. history that investment income will be subject to a payroll taxes.
In 2016, individuals will be required to purchase government health care insurance. Employers with more than 50 workers will be forced to provide health insurance or incur stiff fines.
Things go from bad to worse in 2018. All individuals will be forced to pay a new 40 percent excise tax on private health insurance plans, including those offered by business employers, that are deemed too generous by the government.
By the end of 2019, The Heritage Foundation estimates that the total tax burden of Obamacare on the economy will skyrocket to $102 billion annually.
But that doesn't tell the whole story. Besides the taxes already mentioned, there are 14 other changes to tax law that eliminate deductions, hike taxes and increase fees. Although aimed mostly at companies, consumers always end up picking up the tab for increased business costs in the form of higher prices.
Taxes won't be the only burden for individuals. Americans are likely to find the cost of private insurance prohibitive. The Centers for Medicare and Medicaid Services estimate that private insurance costs are expected to rise a stunning 88 percent.
No wonder the price tag for Obamacare has been hard to pin down. The Congressional Budget Office (CBO) released an updated analysis in March, raising the cost into the $1.1 trillion stratosphere. But that forecast will likely prove too low because the medical coverage standards have not been spelled out by the Institute of Medicine, the independent agency charged with the task of defining benefits.
Meanwhile, the states are facing a January 1, 2013, deadline to submit detailed plans based on the new standards. Insurance companies find themselves in the same predicament, prompting a Blue Cross and Blue Shield official to recently complain about the difficulty in planning for the new law without standards.
Businesses are facing equal uncertainty, particularly those offering health care coverage to employees. Future benefit costs are clouded, which has caused businesses to delay hiring. As a result, some firms and unions have already obtained waivers from the Obama Administration. Recent estimates put the number at "almost a thousand" exemptions from Obamacare.
One of the first in line to be granted a waiver was the powerful Service Employees International Union (SEIU), which represents many state and local government workers. That is no coincidence because the 2.1 million-member union was one of the president's chief supporters, filling his campaign coffers with millions of dollars, while supporting his health care reform.
Once Obamacare coverage begins it will be too late to prevent the government from seizing control of health care, which accounts for 17 percent of the economy. Washington has never once in its history repealed an entitlement program. That's why Congress must unplug Obamacare immediately and terminate the life of this federal boondoggle.
Despite this and two other legal setbacks, the Obama Administration continues to snub the courts, instead quietly amassing the bureaucracy needed to oversee the gargantuan government program. Payrolls are being fattened at both the Internal Revenue Service and the Health and Human Services Department in anticipation of implementation.
Because of the government's stealth approach, most Americans are unaware of the pervasive bureaucracy that will be required to administer federal health care. If the U.S. Post Office employs more than one-half million people, how many government workers will be needed to oversee a trillion dollar health care program?
No answer has been forthcoming from the Obama Administration. Whatever the number, the bureaucracy will require round-the-clock feeding from the government trough. Not to worry because the feds have grand plans to raid your wallet beginning less than two years from now in 2013.
The implementation date was selected by the Democrat controlled House and Senate in 2010 to save Obama from having to defend unpopular taxes during the presidential campaign next year. Shortly after the election, the government will usher in the New Year with a hodgepodge of new taxes aimed at raising more than $503 billion over six years.
An increase in payroll taxes for businesses and individuals will be one of the first to be unleashed beginning in 2013. The current payroll tax of 1.45 percent will almost double to 2.35 percent for individuals making more than $200,000 annually. This tax has been part of the Social Security and Medicare deductions on most individuals' checks.
While this tax targets upper income earners, it is likely to include more middle income families. If history is any indication, entitlement expenses always grow faster than Treasury's revenues, making it unlikely any taxpayers will be spared from paying for the imposing government scheme.
In addition, the health care revision mandates payroll tax rates will apply to investment income, including capital gains, stock dividends, rents and royalties in 2013. This marks the first time in U.S. history that investment income will be subject to a payroll taxes.
In 2016, individuals will be required to purchase government health care insurance. Employers with more than 50 workers will be forced to provide health insurance or incur stiff fines.
Things go from bad to worse in 2018. All individuals will be forced to pay a new 40 percent excise tax on private health insurance plans, including those offered by business employers, that are deemed too generous by the government.
By the end of 2019, The Heritage Foundation estimates that the total tax burden of Obamacare on the economy will skyrocket to $102 billion annually.
But that doesn't tell the whole story. Besides the taxes already mentioned, there are 14 other changes to tax law that eliminate deductions, hike taxes and increase fees. Although aimed mostly at companies, consumers always end up picking up the tab for increased business costs in the form of higher prices.
Taxes won't be the only burden for individuals. Americans are likely to find the cost of private insurance prohibitive. The Centers for Medicare and Medicaid Services estimate that private insurance costs are expected to rise a stunning 88 percent.
No wonder the price tag for Obamacare has been hard to pin down. The Congressional Budget Office (CBO) released an updated analysis in March, raising the cost into the $1.1 trillion stratosphere. But that forecast will likely prove too low because the medical coverage standards have not been spelled out by the Institute of Medicine, the independent agency charged with the task of defining benefits.
Meanwhile, the states are facing a January 1, 2013, deadline to submit detailed plans based on the new standards. Insurance companies find themselves in the same predicament, prompting a Blue Cross and Blue Shield official to recently complain about the difficulty in planning for the new law without standards.
Businesses are facing equal uncertainty, particularly those offering health care coverage to employees. Future benefit costs are clouded, which has caused businesses to delay hiring. As a result, some firms and unions have already obtained waivers from the Obama Administration. Recent estimates put the number at "almost a thousand" exemptions from Obamacare.
One of the first in line to be granted a waiver was the powerful Service Employees International Union (SEIU), which represents many state and local government workers. That is no coincidence because the 2.1 million-member union was one of the president's chief supporters, filling his campaign coffers with millions of dollars, while supporting his health care reform.
Once Obamacare coverage begins it will be too late to prevent the government from seizing control of health care, which accounts for 17 percent of the economy. Washington has never once in its history repealed an entitlement program. That's why Congress must unplug Obamacare immediately and terminate the life of this federal boondoggle.
Sunday, August 14, 2011
Wake Up and Smell the Tea
Barack Obama, who campaigned on the promise of uniting America, can now claim the mantle as the most divisive president in U.S. history. He has become the Demonizer-In-Chief, assaulting big business, health insurers, corporate jet owners, the wealthy, credit rating agencies and everyone else who dares to stand against his bankrupt agenda.
In recent days, the president has reserved some of his harshest verbal venom for the Tea Party, blaming the nascent movement for the Washington wrangling that ended with a debt deal no one liked. Of course, the Obama Amen Chorus in the media and within the Democrat Party bared their fangs in support the president.
Massachusetts's Sen. John Kerry sunk his dental implants in the Tea Party, laying the blame for the Standard & Poor's credit downgrade at the feet of the 87 freshmen GOP Congressmen who adhered toTea Party principles in the debt debate.
Obama's political hatchet man David Axelrod seconded Kerry's assessment, calling the credit agency's action a "Tea Party downgrade." Democrats were just getting warmed up when the mainstream media stepped into the fray with incendiary language.
David Gregory on television's "Meet the Press" program accused the Tea Party of "holding the process hostage" in referring to the debt negotiations. New York Times columnist Thomas Freidman characterized the Tea Party as the "Hezbollah faction" of the GOP.
Figuring his colleagues hadn't gone far enough in exposing their bias, fellow columnist Joe Nocera wrote in The Times that the Tea Party had "waged Jihad on America." Howard Dean, the Democrat Party's left wing loon, infamously branded the movement "racist."
Democrats and their allies in the media have made the Tea Party Public Enemy No. 1 for one reason: they are scared to death that what started as a loosely knit revolution against Obama's perilous penchant for spending will mushroom into an landslide rejection of the president next November.
Democratic pollster Rasmussen's research underscores the issue for Obama and his party. It released results this month that showed "42% of all likely U.S. voters believe the average Tea Party member has a better understanding of problems America faces, while 34% think the average member of Congress is more clued in."
In fact, the Tea Party isn't a a traditional political party, but a fractious federation of like-minded individuals. A poll conducted by CNN/Opinion Research painted a more favorable picture of Tea Party members than the one framed by the media and Democrats.
The research found that three-fourths of those who identified themselves as Tea Party members had attended college, compared to 54 percent of the public at large. Six in ten were male. More than half live in rural America. Most don't actively support the party, but often endorse the Tea Party views.
That hardly is the profile of a "terrorist."
In recent days, Democrats have ratcheted up the anti-Tea Party rhetoric in hopes of shielding the president from the blame he deserves for the debt debacle that ended with the U.S. losing its AAA credit rating for the first time in 70 years, despite Obama's repeated lie that raising the debt ceiling was the only way to avoid a downgrade.
No wonder the president's credibility is deteriorating faster than a crippled Japanese nuclear plant.
Obama got his wish, a debt deal that lifted the moratorium on borrowing. He cannot legitimately finger the Tea Party or its Congressional supporters for the stock market crash and credit downgrade that happened AFTER the bipartisan agreement was signed into law by the president.
For months, the media and Obama clamored for a debt compromise. They misread the American public, thinking that voters preferred compromise over substance. What the electorate wanted was a solution to reclaiming the nation's fiscal footing, not some squishy deal that leaves the debt issue unsettled for 10 more years.
Voters send people to Washington to represent their views. Many inside the Beltway believe that the notion of a representative government is a quaint idea not worth preserving. They salivate after compromise, but only as long as negotiations end up with a lopsided agreement they favor.
Which brings us back to the Tea Party. The reason the movement fired the imagination of the voters was its principled stand against taxes, big government and wanton spending. The electorate was tired of voting for the same old political crowd that promised reform and then promptly changed their stripes the minute they set foot in the Capitol.
Yet when Tea Party backed Congressmen and women balked at talk of raising taxes to reduce the deficit, the media and the Democrat Party acted outraged. In their skewed view, principles should be sacrificed in the name of compromise. That kind of thinking is what led to the current fiscal dysfunction in Washington.
Despite its grassroots origin, the Tea Party movement has proven effective at raising the level of dissatisfaction with Obama's policies. That's what bothers the president and the Democrats most. They want to control the political message by silencing voices of dissent through intimidation, dehumanization and disinformation.
The Big Bad Tea Party has a huge target on its back because it won't bend to Obama's political will. Instead of reaching out to his critics, the president prefers to divide the nation with labels. Name calling is no hallmark of leadership. It is the stock-and-trade of political cowards.
In recent days, the president has reserved some of his harshest verbal venom for the Tea Party, blaming the nascent movement for the Washington wrangling that ended with a debt deal no one liked. Of course, the Obama Amen Chorus in the media and within the Democrat Party bared their fangs in support the president.
Massachusetts's Sen. John Kerry sunk his dental implants in the Tea Party, laying the blame for the Standard & Poor's credit downgrade at the feet of the 87 freshmen GOP Congressmen who adhered toTea Party principles in the debt debate.
Obama's political hatchet man David Axelrod seconded Kerry's assessment, calling the credit agency's action a "Tea Party downgrade." Democrats were just getting warmed up when the mainstream media stepped into the fray with incendiary language.
David Gregory on television's "Meet the Press" program accused the Tea Party of "holding the process hostage" in referring to the debt negotiations. New York Times columnist Thomas Freidman characterized the Tea Party as the "Hezbollah faction" of the GOP.
Figuring his colleagues hadn't gone far enough in exposing their bias, fellow columnist Joe Nocera wrote in The Times that the Tea Party had "waged Jihad on America." Howard Dean, the Democrat Party's left wing loon, infamously branded the movement "racist."
Democrats and their allies in the media have made the Tea Party Public Enemy No. 1 for one reason: they are scared to death that what started as a loosely knit revolution against Obama's perilous penchant for spending will mushroom into an landslide rejection of the president next November.
Democratic pollster Rasmussen's research underscores the issue for Obama and his party. It released results this month that showed "42% of all likely U.S. voters believe the average Tea Party member has a better understanding of problems America faces, while 34% think the average member of Congress is more clued in."
In fact, the Tea Party isn't a a traditional political party, but a fractious federation of like-minded individuals. A poll conducted by CNN/Opinion Research painted a more favorable picture of Tea Party members than the one framed by the media and Democrats.
The research found that three-fourths of those who identified themselves as Tea Party members had attended college, compared to 54 percent of the public at large. Six in ten were male. More than half live in rural America. Most don't actively support the party, but often endorse the Tea Party views.
That hardly is the profile of a "terrorist."
In recent days, Democrats have ratcheted up the anti-Tea Party rhetoric in hopes of shielding the president from the blame he deserves for the debt debacle that ended with the U.S. losing its AAA credit rating for the first time in 70 years, despite Obama's repeated lie that raising the debt ceiling was the only way to avoid a downgrade.
No wonder the president's credibility is deteriorating faster than a crippled Japanese nuclear plant.
Obama got his wish, a debt deal that lifted the moratorium on borrowing. He cannot legitimately finger the Tea Party or its Congressional supporters for the stock market crash and credit downgrade that happened AFTER the bipartisan agreement was signed into law by the president.
For months, the media and Obama clamored for a debt compromise. They misread the American public, thinking that voters preferred compromise over substance. What the electorate wanted was a solution to reclaiming the nation's fiscal footing, not some squishy deal that leaves the debt issue unsettled for 10 more years.
Voters send people to Washington to represent their views. Many inside the Beltway believe that the notion of a representative government is a quaint idea not worth preserving. They salivate after compromise, but only as long as negotiations end up with a lopsided agreement they favor.
Which brings us back to the Tea Party. The reason the movement fired the imagination of the voters was its principled stand against taxes, big government and wanton spending. The electorate was tired of voting for the same old political crowd that promised reform and then promptly changed their stripes the minute they set foot in the Capitol.
Yet when Tea Party backed Congressmen and women balked at talk of raising taxes to reduce the deficit, the media and the Democrat Party acted outraged. In their skewed view, principles should be sacrificed in the name of compromise. That kind of thinking is what led to the current fiscal dysfunction in Washington.
Despite its grassroots origin, the Tea Party movement has proven effective at raising the level of dissatisfaction with Obama's policies. That's what bothers the president and the Democrats most. They want to control the political message by silencing voices of dissent through intimidation, dehumanization and disinformation.
The Big Bad Tea Party has a huge target on its back because it won't bend to Obama's political will. Instead of reaching out to his critics, the president prefers to divide the nation with labels. Name calling is no hallmark of leadership. It is the stock-and-trade of political cowards.
Sunday, August 7, 2011
Nightmare On Wall Street Dooms Obama
History will record that Barack Obama signed away a second term in office when he approved legislation on August 2 to raise the nation's debt ceiling to an once unfathomable level of more than $16 trillion. With a stroke of the presidential pen, Obama unleashed a torrent of economic backlash.
The stock market greeted the president's debt deal with a resounding rejection, sending the Dow Jones average tumbling 512.76 points on August 4. The steep decline ranked as the ninth-worst in the market's history. Staggering losses of trillions of dollars wiped out stock gains for the year.
That was significant because the market's performance was the lone economic gauge that had improved under Obama in 2011. Jobs have wilted with the summer heat. Unemployment bounces from bad to worst. Home sales and prices are in the toilet. The only silver lining was a robust stock market. No more.
Make no mistake about it, this is Obama's debt deal. He stiff armed Speaker John Boehner's attempts to forge a bipartisan deal. Then the president panicked as the clock ticked down on the nation's first credit default. He dispatched senate majority leader Harry Reid to strike a deal, any deal.
As a result, Obama was forced to sign legislation that trimmed the fiscal deficit by $2.1 trillion over 10 years in exchange for raising the debt ceiling by another $2.1 trillion from its current record level of $14.294 trillion. The deficit reduction is to be achieved solely by slicing away at the bloated federal budget.
For months, the president and his Democrat cronies had brayed like jackasses that tax increases had to be part of any deal. Republicans called his hand. Obama caved for selfish political reasons. He wanted to postpone having to revisit the debt ceiling issue until after the November presidential elections next year.
When Republicans balked at a debt ceiling extension of more than a year, the president and his mouthpiece Jay Carney resorted to lies. They wagged their fingers at the GOP, claiming that past Congresses had reached longer agreements. The facts say otherwise.
Since 1979, the average debt limit extension given to Treasury has been 251 days, about eight months. The shortest increase in 1981 lasted all of one day. The longest extension in 1997 allowed enough leeway for borrowing to continue for five years.
Now the president is trying to placate his far left political base by suggesting that tax increases on the wealthy will be part of a bipartisan congressional committee's efforts to find $1.5 trillion beyond the $917 billion in cuts already identified. Like a two-year old, Obama is stamping his feet to rally the Democrat Kook Klan.
Meanwhile, the grownups who actually work for a living aren't impressed. In a recent USA Today/Gallup poll 46 percent of Americans registered their disgust with Obama's debt deal. More than 40 percent think the agreement will do more to harm than help the economy. Not good news for a president who believes he can double-talk his way out of any failure.
The folks at Standard & Poors also were nonplussed. The rating agency lowered the U.S. credit rating by one notch to AA-plus, an unprecedented blow to the nation's stature as the gold standard for fiscal responsibility. The U.S. had held the top-tier AAA credit rating since 1941, a period of 70 years.
In revising its rating, S&P argued that the deficit cuts did not go far enough. Using government figures, the credit rating agency projected that the nation's debt level would hit $20.1 trillion by 2021, despite the reductions contained in the debt deal. In other words, the debt keeps rising for the foreseeable future.
The loss of the triple-A rating was once unthinkable. However, Obama's reckless spending the last two years when his party held both houses of Congress has left a financial mess that has fattened budget deficits and burdened Americans with unconscionable debt.
As a result, U.S. Treasury bonds, once hailed as the safest security in the world, are now rated lower than bonds issued by countries such as Britain, Germany, France and Canada, according to Reuters. The Chinese, who hold $1 trillion in U.S. debt, issued a strong condemnation of the debt deal and related credit downgrade.
"China will be forced to consider other investments for its reserves," said Li Jie with the Central University of Finance and Economics. "U.S. Treasuries aren't as safe anymore."
Who thought that China, once an economic weakling, would be lecturing the world's economic powerhouse on fiscal responsibility? It happened on Barack Obama's watch. George Bush was nowhere on the scene, yet Obama still found reasons to blame the former president, as he has done ad naseum for the past three years.
No matter how hard he tries Obama cannot escape culpability for the nation's economic decline. His budgets, his spending and his deficits have shoved the country to the brink of bankruptcy. Barack Obama owns the American economy with all its financial warts.
Don't expect the president to suddenly unveil any solutions to revive the economy. He is too busy planning his retirement as it becomes patently obvious that voters will reject his failed presidency next November.
The stock market greeted the president's debt deal with a resounding rejection, sending the Dow Jones average tumbling 512.76 points on August 4. The steep decline ranked as the ninth-worst in the market's history. Staggering losses of trillions of dollars wiped out stock gains for the year.
That was significant because the market's performance was the lone economic gauge that had improved under Obama in 2011. Jobs have wilted with the summer heat. Unemployment bounces from bad to worst. Home sales and prices are in the toilet. The only silver lining was a robust stock market. No more.
Make no mistake about it, this is Obama's debt deal. He stiff armed Speaker John Boehner's attempts to forge a bipartisan deal. Then the president panicked as the clock ticked down on the nation's first credit default. He dispatched senate majority leader Harry Reid to strike a deal, any deal.
As a result, Obama was forced to sign legislation that trimmed the fiscal deficit by $2.1 trillion over 10 years in exchange for raising the debt ceiling by another $2.1 trillion from its current record level of $14.294 trillion. The deficit reduction is to be achieved solely by slicing away at the bloated federal budget.
For months, the president and his Democrat cronies had brayed like jackasses that tax increases had to be part of any deal. Republicans called his hand. Obama caved for selfish political reasons. He wanted to postpone having to revisit the debt ceiling issue until after the November presidential elections next year.
When Republicans balked at a debt ceiling extension of more than a year, the president and his mouthpiece Jay Carney resorted to lies. They wagged their fingers at the GOP, claiming that past Congresses had reached longer agreements. The facts say otherwise.
Since 1979, the average debt limit extension given to Treasury has been 251 days, about eight months. The shortest increase in 1981 lasted all of one day. The longest extension in 1997 allowed enough leeway for borrowing to continue for five years.
Now the president is trying to placate his far left political base by suggesting that tax increases on the wealthy will be part of a bipartisan congressional committee's efforts to find $1.5 trillion beyond the $917 billion in cuts already identified. Like a two-year old, Obama is stamping his feet to rally the Democrat Kook Klan.
Meanwhile, the grownups who actually work for a living aren't impressed. In a recent USA Today/Gallup poll 46 percent of Americans registered their disgust with Obama's debt deal. More than 40 percent think the agreement will do more to harm than help the economy. Not good news for a president who believes he can double-talk his way out of any failure.
The folks at Standard & Poors also were nonplussed. The rating agency lowered the U.S. credit rating by one notch to AA-plus, an unprecedented blow to the nation's stature as the gold standard for fiscal responsibility. The U.S. had held the top-tier AAA credit rating since 1941, a period of 70 years.
In revising its rating, S&P argued that the deficit cuts did not go far enough. Using government figures, the credit rating agency projected that the nation's debt level would hit $20.1 trillion by 2021, despite the reductions contained in the debt deal. In other words, the debt keeps rising for the foreseeable future.
The loss of the triple-A rating was once unthinkable. However, Obama's reckless spending the last two years when his party held both houses of Congress has left a financial mess that has fattened budget deficits and burdened Americans with unconscionable debt.
As a result, U.S. Treasury bonds, once hailed as the safest security in the world, are now rated lower than bonds issued by countries such as Britain, Germany, France and Canada, according to Reuters. The Chinese, who hold $1 trillion in U.S. debt, issued a strong condemnation of the debt deal and related credit downgrade.
"China will be forced to consider other investments for its reserves," said Li Jie with the Central University of Finance and Economics. "U.S. Treasuries aren't as safe anymore."
Who thought that China, once an economic weakling, would be lecturing the world's economic powerhouse on fiscal responsibility? It happened on Barack Obama's watch. George Bush was nowhere on the scene, yet Obama still found reasons to blame the former president, as he has done ad naseum for the past three years.
No matter how hard he tries Obama cannot escape culpability for the nation's economic decline. His budgets, his spending and his deficits have shoved the country to the brink of bankruptcy. Barack Obama owns the American economy with all its financial warts.
Don't expect the president to suddenly unveil any solutions to revive the economy. He is too busy planning his retirement as it becomes patently obvious that voters will reject his failed presidency next November.
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