People, Providence & Congress

With remarkable consistency, the Obama Administration has stayed true to its economic agenda, producing federal deficits in excess of $1 trillion for the second consecutive year. The $1.29 trillion shortfall of fiscal year 2010 fell just shy of the record-breaking $1.42 trillion budget gap of 2009. Over 30% of this year’s deficit - $414 billion - is attributable to interest paid on foreign and domestic debt, while increased government losses on Social Security, Medicaid and Medicare account for the bulk of the remainder. The massive national deficits of fiscal years 2009 and 2010 have merely served to exacerbate the sheer enormity and unsustainable drift of America’s national debt – presently approaching $14 trillion.

There are times in the history of a nation when the accumulation of debt can be justified. The United State’s Constitution charges the federal government with protecting the nation’s borders and with defending the Union from foreign invasion, from domestic insurrection, and from threats to its national honor, thereby holding Congress responsible for providing for the general welfare of its citizenry through an active military and a stable national infrastructure of communication, transportation and defense. Irrespective of budgetary prudence, if world events or domestic neglect create a situation in which these institutions become imperiled, Congress should and must provide the funding necessary to effectively reverse that threat. However, even in instances where the creation of debt is necessary and justifiable, it should not be blithely accumulated and it should always be accompanied with a comprehensive plan for its expedient elimination.

The $2.71 trillion in deficit spending that has defined the Obama Presidency, however, cannot be justified as supporting the general welfare of the nation, nor can it be rationalized as money spent in defense of America’s sovereignty, its borders or its honor. While the percentage of defense spending, as a share of the budget, has remained consistent with America’s historical average at 20%, entitlement spending, by the same measure, has increased exponentially. Safety net programs – unemployment benefits, food stamps, low-income housing assistance – have understandably increased, given the state of the economy. So too, has government spending swelled under a plethora of less justifiable and considerably more dubious government funded initiatives such as “cash for clunkers”, two misbegotten “stimulus” bills, and a litany of corporate bailouts. In addition to these wasteful measures, the Obama Administration has seemingly offered a blank and open checkbook to many of the federal government’s most crooked and moribund agencies, e.g., the Pension Benefit Guarantee Corporation, Fannie Mae, Freddie Mac and the Federal Deposit Insurance Corporation. The professed goals of the Administration in initiating these programs and subsidies – green job creation, correcting the laws of capitalism, raising aggregate demand – can, at best, be justified as issues pertaining to the specific welfare of the people, therefore falling under the proper jurisdiction of state and local government. While creating and funding government programs is not extra-constitutional, per say, it is questionable behavior given the fact that this superfluous agenda has led to such onerous federal deficits and has proven detrimental to the nation.

Social Security, long praised by Democrats as eternally self-sustainable, has joined the ranks of deficit producing programs in fiscal year 2010. Because of the interrelationship between Social Security, Medicaid and Medicare, all of these institutions will be running permanent deficits by fiscal year 2017. The shortfalls that these programs produce will naturally be subsidized by America’s general fund which, in turn, will require additional taxpayer revenue. Social Security, Medicaid and Medicare are all worthy programs that must be sustained, but unless restructured, both in form and in function, their continued existence is uncertain. The American people, by nature, are disinclined to benefit themselves at the cost of their children and their grandchildren. These three programs currently represent a standing-structural-deficit that, if left unchecked, will snowball out of control by the end of the present decade.

Although pragmatic reforms and spending cuts are urgent steps that must be taken in order to achieve a semblance of economic stability, their effect will prove negligible unless coupled with lasting pro-growth initiatives. Perhaps the most damaging aspect of the Obama Administration, thus far, is its blatant anti-business philosophy. At a time when U.S corporations are in desperate need of a boost to compete in the world market, they are facing the prospect of the largest tax increase in American history on domestic business and industry, due to take effect in January. As the dollar continues to devaluate due to the size of the national debt and the Federal Reserve’s ceaseless insistence on printing and reprinting new currency, a devastating 35% tax on all new corporate investments is further discouraging venture capitalism. With regard to China – a nation infamous for human rights violations and its recent attempts at military and navigational hegemony in the South China Sea - the United States Treasury Department is presently instigating a questionable trade-war concerning the value of the nation’s Yuan. If the Chinese were to increase the value of its currency, as the Obama Administration desires, it would result in Chinese products being sold in America at considerably increased prices, thus placing an enormous burden on American buyers and sellers respectively. All the while, President Obama appears omnipresent, with near daily attacks and virulent exhortations on the job and wealth creators of the nation, e.g., the United States Chamber of Commerce and Wall Street. Without economic growth – a function of the private sector – the American economy will be doomed, at best, to a fate of perpetual mediocrity. Across the board tax-cuts, trade agreements with allied nations such as Panama, Colombia and South Korea, and an easing of regulatory measures are required steps for a nation to achieve substantial economic growth – an indispensable prerequisite of recovery.

Given the Obama Administration’s track record concerning the three most vital components of a lasting economic recovery, the Congress of 2011 will face the daunting task of rehabilitating America’s unstable market while simultaneously battling an organized resistance from the executive branch of government. There are good men and women in both political parties who want what is best for the nation. These are the people who must now stand up, unite and endeavor to push back against the President’s failed agenda. Substantial cuts in spending, pragmatic reform of broken government programs and pro-growth initiatives represent the only path to redemption. It is imperative that Congress acts swiftly and stoically in order to achieve these goals; the bleak alternative is that our children and grandchildren will come of age in an America devoid of exceptionalism – a far different nation than we and our ancestors had the incredible privilege to experience.

Although the day of reckoning is fast approaching, it is not too late for America; its best days may still be ahead. Our nation’s fate now lies with the unlikely trio of the People, Providence and Congress.

Jeremy Pitcoff