05/29/09 thoughts

America Is Broke
A domestic “Nixon goes to China” moment.

By Deroy Murdock

‘We’re out of money,” President Obama admitted. “We’re operating in deep deficits,” he said in a May 23 C-SPAN interview. While Obama is refreshingly realistic, he resembles a man who strolls into a bar, sees that his wallet is empty, then slaps a round of drinks for everyone onto his wheezing credit card. Rather than use America’s rapidly deteriorating public finances to restore fiscal discipline after G. W. Bush’s deplorable spend-o-rama, Obama is digging America into a deeper hole — not with a shovel, but with a backhoe. If he continues, the ensuing canyon walls will collapse and crush us.

Look how spectacularly Washington squanders your money:

General Motors recently requested $2.6 billion in fresh bailout money. On May 22, Washington gave GM $4 billion, 154 percent of what it wanted. Worse yet, this gift arrived just days before GM was expected to declare bankruptcy. The Treasury might as well have deposited $4 billion into the nearest landfill.

The so-called Bridge to Software is an $11 million taxpayer-funded project in Redmond, Wash. This landscaped bridge, pedestrian walkway, and bike lane will connect the east and west campuses of Microsoft — a company with $20 billion in cash. Meanwhile, as CBS News reports, the 76-year-old South Park Bridge carries 20,000 people daily and scores 4 out of 100 on a government-safety scale. (Before it collapsed in 2007, Minneapolis’s Mississippi River Bridge earned a 40.) Its repair remains unfunded. Washington is utterly incapable of setting priorities, or of barring the wealthy from the trough.

Across the entire budget, such lunacy soon spells fiscal doom.

Thanks to recession-driven revenue shortfalls and the endless Bush-Obama bailouts and stimuli, the federal deficit will explode from 2008’s $458 billion to at least $1.84 trillion in 2009. Despite the mid-month tax collections, the federal government finished with an April deficit for the first time in 26 years. Washington incinerated all those hard-earned tax payments within a fortnight.

Last year was the first in which Medicare disbursements outran revenues. Medicare is expected to go kaput in 2017, two years sooner than had been predicted. Come 2016, Social Security checks similarly will outpace the payroll taxes that fund them.

Publicly held debt’s share of Gross Domestic Product has soared from 33 percent in 2001 to 44 percent in 2008 and will hit 77 percent in 2013, Standard & Poor forecasts. Federal IOUs total $8 trillion. Beyond that, $45 trillion in unfunded liabilities constitute a long-term Red River on the national ledger. Financial analysts warn that America could lose its sterling AAA bond rating. Atop international humiliation, this would subject both government and consumers to higher interest rates as U.S. bonds grow riskier.

Washington has greeted all of this, not by cutting outlays, but by monetizing them. As commentator Glenn Beck puts it: “We’ve gone from tax-and-spend to tax-and-print.”

Obama now faces a domestic “Nixon goes to China” moment that could transform him into one of America’s finest presidents or convert him into Jimmy Carter II.

Just as Richard Nixon’s anti-Communist record gave him the latitude to re-engage Mao’s China, Obama’s solid-Left credentials grant him the leeway to padlock dozens of government agencies, terminate hundreds of federal programs, and finally slay the entitlement monsters that will devour this republic. Obama can do this without becoming paralyzed by liberal catcalls about feeding Granny to crocodiles. A few concrete steps would help Obama succeed.

Obama should implement zero-based budgeting. Every federal commission, agency, and department should justify its spending from the first dollar up, rather than simply ladle fresh cash onto last year’s often bloated and duplicative budget.

Why, for instance, does Uncle Sam still run the $166 million Tennessee Valley Authority and the $958 million Rural Utilities Service, now that Appalachia has electricity? Similarly, must every program at the departments of Commerce, Housing, and Transportation remain immortal?

Each federal transfer and entitlement payment should be affluence-tested. Poor people without options should keep vital assistance. The middle class should get middling help, at best. And the wealthy finally should be told to fend for themselves — from subsidized “farmers” who inhabit Manhattan’s luxury co-ops, to millionaire seniors on subsidized pharmaceuticals, to CEOs swimming laps in bailout money.

Finally, if Washington cannot cut the federal budget, its growth at least should not exceed inflation. According to the Heritage Foundation’s Brian Riedl, had fiscal bedwetter George W. Bush’s total expenditures merely matched inflation, $3.3 trillion would have gone unspent, averaging some $400 billion annually.

President Obama did not groom himself to become the elegant, eloquent man who steered America into a fiscal Grand Canyon. Instead, he should harness his intellect and charisma to retreat from the precipice. He has just enough time, if he U-turns right now.

— Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution at Stanford University.

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Urban Survival...

Psst! Want a Car Negotiator?

I didn't mean to start of what should be happy friday as a grouch, so if surly, sour, and real bothers you, go hit some infotainment site. I'm in a grouchy mood. Why? You wanna know why? I'll tell you why...

The headlines are pretty grim around the GM story. "GM suppliers face new threat as bankruptcy looms for Automaker" reports Bloomberg this morning. And it looks like it could be filed as early as Monday.

Now, I'll tell you what stumps me - and it has bothered me about the AIG deal, too. When the public puts in piles of dough - and in GM's case, you and me put up the dough - and in any other kind of company I've ever read about, that would buy us (taxpayers) control of the Board of Directors who in turn call the shots in concert with the CEO, right?.

I usually won't go name-calling. I usually try to stay above such trivialities and leave that to the overly rabid right. But just between you and me, if a company's board of directors oversees a decline of stock price from over $38 a share to just over a buck at the close yesterday, should they...you know...be replaced?

Oh sure, I know what the excusifications will be - "Oh these guys all know the car industry" might be proposed. Oh? How many billions have they lost again? They don't know jack.

"Oh, we want to preserve stability" might be another. Yeah, like tell that to the millions impacted by their wisdom and who are taking gunpoint vacation time this summer because the company has been run into the ground.

I don't know why the government doesn't just come in and sweep it clean. Down here in East Texas, $70-billion confers serious ass-kicking rights. But not so, apparently, in 'politically correct land' inside the Beltway. Are you kidding?

For the roughly $70 billion plus this steaming lump is going to cost us all (roughly $228.76 for every man, woman, and child in America, by the way), can we please - pretty please with sugar on it - find a new group of Deciders in the board room; people with vision. Ever hear of a concept called 'getting ahead of the curve' instead of being run over by it?

Because the folks who build the cars aren't to blame for GM's failure. It's an outmoded, heavy into denial decision-making process and upper management style that has failed and I want no part of my $228.76 that I've got as skin in this game going in any form - options, stock, travel, or cash - to the people who didn't see it coming and haven't 'gotten it' since the rice burners came to America 40 years ago and kicked our ass.

Like I said: I won't name call here, but look up the Greek word "idios" in the dictionary and read on a ways from there. You following me?

At current prices, I figure I own 200-shares of GM - and do everyone in America.

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As I've said before, the fact that GM isn't looking at a whole inside-out change to something like Harley-Davidson's org chart and ethics, dims my faith in the country's future, not to mention what democracy puts in office in terms of 'best and brightest' may not be that.

I may be a small-time consultant, but look at the motivation and strategy guys like Evan Carmichael come up with as building blocks for success at Harley:

• Innovation

• Exhibition

• Dedication

• Passion

• and Branding

Think more focus could have helped GM if they'd gotten massively proactive? Until recently you know, reports are the GM Board was meeting once a month. Now at least, they are meeting several times a week. Better late than never? I won't touch that bet.

May I make a modest suggestion to the Obama car trouble team and the GM board? Find the "designated smart guy" inside of Harley Davidson and get his butt on the next plane to Motown. Is he there yet? Then resign.

Oh, and tell those people in Washington I want my share certificates for both AIG and GM. Don't like holding things in 'street' name. I know how that works., LOL.

Sound far out? Not as far out as this "Germany calls on Clinton to resolve GM fight. "

Selling Green

I see where Nancy Pelosi has time to be in China talking to kids about the need to go green.

WTH? Don't we have a few more pressing issues that demand action here in the USA? I mean GM's about to go toes up, we're a couple of months out from the commercial real estate meltdown and she's talking global warming on what sounds like a Gore-Lite tour in a country which is already not very trusting of us since our dollar's tanking sooner than later (which is why gold is up today, BTW).

Glad I don't live in her district, for damn sure. No, instead I live in the district of a poster-boy for the credit card industry, but that's another rant for another day.

Might I ask that Ms Pelosi come back to America and get to work on headlines like "Leap in U.S. debt hits taxpayers with 12% more read ink"?

USA Today figures the US federal government debt is $546,668 per household. Oh? Does $211,068 per person feel any better?

I'm ticked and I want the 'old ways' gone NOW. But I ain't your problem Madam Speaker. Nope. Your problem is that you ain't 'getting it' about how mad the average American is and since the Bush administration drove the country into the front of this Depression, 5.7 million people have lost their jobs and there are right now - today - nearly 14 million people unemployed. That's your problem right there. That and pitchforks.

So let me ask again more politely: Madam Speaker: What the hell are you talking to school kids in China for? Who bought your plane ticket, anyway?

NK's Newest

Another day, another missile - and this one with enough range to get to most of South Korea from the North. The West has raised its alert status to Defcon 2 in the region - just short of going into butt-kick mode.