Out of control spending: Obama splurging over 30 percent of our GDP

by   Posted on April 19th, 2010 in Opinion

By Alan Moore, Staff Writer

With the massive amount of spending by the federal government, it is clear that we are on an unsustainable path to destruction.

The Obama Administration has been spending money like a freshman with his first credit card; unbeknownst to him, he will have to pay it back in the very near future with interest.

The Troubled Asset Relief Program (TARP) used by the past Bush Administration infused public money into private enterprise, and the floodgates were opened to a range of big spending.

TARP set the stage for the American Recovery and Reinvestment Act of 2009, simply referred to as the “economic stimulus plan.” $989 billion was shelled out to create and expand government programs and workforce, and it helped increase the federal deficit to almost $1.8 trillion.

So who are the United States’ primary creditors? China owns $877.5 billion of our debt. Japan owns the next highest amount at $768.5 billion. Britain owns $321.7 billion, and Hong Kong owns $152.4 billion.

Paul Volcker, former Federal Reserve chairman and White House economic adviser recently said, “If at the end of the day we need to raise taxes, we should raise taxes.” Do not take those comments lightly; Volcker is the man running the fiscal policies of this administration.

Current Federal Reserve Chairman Ben Bernanke recently was quoted saying, “The current path of fiscal policy is a serious long-term threat to the health of the national economy. There is no single issue that is more worthy of political sacrifice from elected representatives than this one.”

But why should a college student care? Obama has been pretty adamant that the government is going to tax the rich and leave the middle class alone. He’s been tossing around that mantra since the campaign trail. So we have nothing to worry about, right?

Wrong. Taxing the rich won’t pay for this spending free-for-all. As The Wall Street Journal poignantly pointed out April 8, “In recent decades, the current tax code has yielded revenue on average of 18.5 percent or so of GDP, whether tax rates go up or down.

The wealthy adjust their behavior or shield more income via loopholes, so income-tax increases never gain as much revenue as politicians claim.

With spending as a share of GDP now at 25 percent, Democrats have to soak the middle class because that’s where the real money is.”

Volcker also spelled out exactly how this soaking of the middle class will happen. He expressed optimism for a European-style Value Added Tax (VAT). The San Francisco Chronicle described a VAT as “a sales tax on steroids.”

Every level of production would be taxed: from purchasing a pack of gum to buying a house. Rates range in Europe from 6.5 percent to 25 percent.

The U.S. has gone down this path before. In the 1930s, federal spending started out at 3.4 percent of the economy. Former President Franklin D.
Roosevelt ballooned that spending to 10.3 percent by 1939 and 12 percent by 1941.

And it didn’t even work. We didn’t pull out of the Great Depression until World War II broke out and a major influx of jobs was created to help the war effort.

In contrast, Obama came into a government already spending 21 percent of GDP. With his plans for recovery, that percentage is going to be 30 percent or more of the GDP being spent.

The major difference is that Roosevelt pushed spending to 12 percent over a decade; Obama did it in less than a year.

Deficits will destroy this country if we don’t do something about it soon.

You can get ready to pay anywhere from 6.5 – 25 percent on everything you purchase or we can kick the bums out of office who have put us in this mess.

Every legislator who voted for the health care boondoggle and every unnecessary and bloated spending program should be voted out of office.
In 2012, we need to elect a president who has a clue on how to get us out of this mess.

We need someone who is business savvy and who understands basic economics, knowledge our current president unfortunately lacks.

Our other choice is to start learning Chinese, because soon they’re going to own us.



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