In defense of Obama (allow me to explain)

Let me start out by saying, that feels weird uttering out that title to myself. For those that don’t know me... I’m not a liberal, far from it. For those that do, know I would consider myself a Libertarian and Libertarianism is rooted in logic. Freedom across the board seems to be the "fairest" premise one can have in such an unfair game that is politics. With that said, I see a lot of venom spit at the President in terms of his economic approach that I don’t think is quite fair. Again, before you bitch slap your monitor - allow me to explain.

Much has been made recently about the Presidents accumulation debt. We have seen 5 Trillion added onto the 10 Trillion of national debt since he came into office in January 2009, that's no cheap date. So let there be no doubt that the spending is spiraling out of control going forward.  However, the attempt to put this on one man and his quest to outspend any president in history doesn't make him a Marxist as some would like to believe he is; it makes him a loyal solider. First a very crude and broad history.

A curious thing happened during the early 80's... GDP started to escalate as the country found itself in the midst of an economic growth period unlike anything it has seen in decades. One could point to Nixon ending Bretton Woods in the early 70's as a precursor to this expansion but that is another topic for another day. The reality was the country was booming. However, with that came enormous amounts of debt. So much so that the National debt ballooned from 1 Trillion in 1980 to 4 Trillion by 1988; so this explosion of growth came with a price tag (on a credit card).

Even though the debt was piling up as long as the economy kept building and building like it always has, there would be nothing to worry about. So the federal outlays began to climb and so did the deficits. Bill Clinton had his time to shine as being the only president in four decades to pass a balanced budget, although that was much to do because of the tech boom and the validation and explosion of a new business and platform: the Internet. Then the subsequent NASDAQ crash came in 2000, right when the economy was heading into recession.Ouch.

Then something changed. George Bush Jr was elected and began to rapidly increase spending on new entries to the budget like the Prescription drug plan (entitlements or votes) and Homeland Security (not sure what that still does to this day) while cutting taxes in the midst of a recession. Then we added two wars on two separate fronts and before you knew it we had doubled the debt from roughly 5 to 10 trillion in his eight years and oh yhea, the housing bubble bursts bringing on one of the worst financial calamities since the 30's.  And if that wasn't enough, right before his leaving of office the great recession came and wreaked havoc on our economy on all fronts (except for those at the very top) causing us to pass TARP while most taxpayers getting what amounts to a welfare check of 300-1200 Dollars from the Economic Stimulus Act.

Enter the "O" man. Right out of the gate, Mr Obama pushed through a 780+ Billion dollar stimulus bill which had much of the nation in an uproar based on the preconceived notions upon his entering of office. That stimulus act, like George Bush's before him, had large lump of tax credits worth 250 Billion, so it wasn't all spending parse. President Obama's budgets, although record setting high nominally; were in-line with the last budget of President Bush. The subsequent Obama budgets after his first were (and estimated) to be in the 3.5 to 3.7 Trillion dollar range. President Obama therefore is no bigger of a spender than President Bush if you account for the history seen below.

A large part of the deficit spending has to do with the walloping the middle class took as it affected the receipts. The last three years (2009-2011) receipts were roughly 400 billion lower then they were in all three years before (2006-2008). At the same time the outlays keep increasing. This creates tremendous deficits. But, it wasn’t like Obama came in with a blank check. In fact, Obama's first budget had actually less spending than Bush's last year in office. Obama's final budget is actually only 200 billion more than Bush's final budget (and Bush's biggest to be fair). 

So, if President Obama doubles the national debt, he will just be doing his part to continue the legacy that was put in place before him started in the early 80's by Ronald Regan. This is no disrespect to George Bush nor is this some type of vindication for Mr Obama; its simply setting the record straight. If anything, this points to a bigger problem, regardless of who sits in the oval office and its pretty straight forward. We have too many bills and not enough income. How we bridge this gap, will be the most vital national issue of the next decade. Keynesian economics appears to have reached its saturation point. We either slash spending or we dramatically raise taxes... or invent the internet again.

If we only had 1 Trillion...

Jesse Jackson Jr, the esteemed (sic) Congressman from Illinios said recently that we could bail out the states and local governments for just a mere Trillion. Well, its 900 billion to be exact. Now he contends this would be larger than the last two stimulus packages put together, but... who cares right? Its only a Trillion between friends.

“So fore a mere $900 billion in one year, which is slightly more than the last two stimulus packages, we can bail out all the states, most of all of are counties and cities.”

"Mere"? That's almost the deficit of the federal government! So, let me get this straight. The federal government are facing annual budget deficits of 1+ Trillion each year for the foreseeable future and Mr Jackson wants to add to that... to pay for the states and local governments inability to live within in its own means? How does he suppose we get that 900 Billion when we are already 1.3 Trillion in the hole from last year? Add it to the 10+ trillion in the hole in public debt? Which isn't counting the 5 Trillion in intergovernmental debt. This is utter stupidity at its finest.

What about the states and local governments that aren't in the red and who run their governments with efficiency and are responsible with their peoples money? They should be the ones rewarded. Why throw borrowed money at people who cant stay out of debt and cant escape bad policy? Do we assume once these city's and states are in the black, they all of a sudden will become fiscally responsible? Is this not the definition of insanity?  

“Insanity is doing the same thing, over and over again, but expecting different results.” ―  Rita Mae Brown

Is this not the antithesis of sound and reasonable judgement? Is this not the poster-boy of robbing Peter to pay Paul? But this is what happens when you have a name that people recognize. A nice treasure chest behind you in a district that overwhelmingly has supported your party and oh yeah; you share the ethnicity of the predominate race in the district who has always strongly voted within racial lines.

His father has made a living off race baiting and using his color to hijack the supposed pulse of black America all the while using his non profit to cover up and pay for his extra marital affairs and love child. Jesse Jackson Jr has never been a part of anything outside of school and politics; thus how much can he understand about how the real world works? This is the same guy who thought giving the public IPods and Laptops would end unemployment. Its obvious the apple doesnt fall too far from the dumb tree.

How policies perception and reality are often ambiguous

Part 2 of a 3 part story on the Department of Defense and its coming to the realization of its own shortcomings and the realities it faces; and the motivation for those that will not go down swinging.

As we continue our buildup to combat the dangers of the War on Terror, somewhere along the way; somebody failed to tell our elected leaders that the defense budget was becoming super sized. Wasn’t the Homeland security created to organize our communications and protect us here at home from terrorism? That budget this year was 57 Billion.

But the beat goes on and the defense budget keeps increasing. It was President Bush who was once labeled a war monger by many of us (and rightfully so) yet President Obama has not only kept up the same strategies, he has expanded upon them and increased spending along the way. So what exactly is the defense budget and how does it relate to other nations spending?

First, here is a little perspective:

In 2001 (in 2010 inflation adjusted dollars) the base budget (excludes Nuclear and War funding) for Defense was 390 Billion

In 2011 (in 2010 inflation adjusted dollars) the base budget (excludes Nuclear and War funding) for Defense was 540 Billion

That is a 38% increase in 10 years. Again, this isn’t including the Nuclear Weapons programs or the wars we are fighting throughout the Middle East. If it seems like a lot; it’s because it is. Now the cuts that will take place starting in 2013 are not actually from existing defense… it’s from proposed increases. According to Senator Rand Paul of Kentucky:

"This may surprise some people, but there will be no cuts in military spending because we’re only cutting proposed increases. If we do nothing, military spending goes up 23% over 10 years. If we [make these cuts], it will still go up 16%."

So, in reality this is just slightly blunting the momentum of the leviathan that is the DOD. The Department and its cozy relationship with Congress and Industry (queue the black and white Eisenhower farewell address) remain warm and fuzzy and most importantly to those three love birds: intact and thriving.

And that I believe is the point. It has to be. How can anyone, given the information and the trends not see defense as a bloated bureaucracy, one that should be first in-line on the chopping block? Our ever expanding Department of Defense is not in an arms race yet their budget and approach clearly says otherwise. Shouldn’t we be shaping our military to fight the battles of the 21^st Century; instead of preparing for an enemy of the twentieth that doesn’t exist?

In 2010 we spent almost six times the amount on defense than China does and eleven times more than Russia; yet many if not a majority of our elected leaders refuse to accept the notion of making cuts in defense. To me, it’s pretty clear… if we take the 18 nations that spend the most on defense; the US outspends all of her counterparts… ALL 17 of them COMBINED. So cuts are not only logical in our economic situation but they are a necessity; even if we were not drowning in debt.



Isn't it a bit silly for us to be even worried about a war with another super power in the first place? The idea of us engaging in war with a China or Russia is almost laughable because of how implausible it is. For one, it would be certain nuclear mutual devastation and then you have the reality of China and the US being so economically intertwined; it would be disruptive to both countries at so many levels.

In fact so much so that even the funding of a sustainable war would be impossible. Most people in this country see China as an economic threat and rightfully so, but it’s a threat only because we depend on them so much; as they do us. Our 1/4+ Trillion dollar trade deficit with a nation has a tendency to create a little codependency.

We are building a military prepared to wage a war not seen since the days of Hitler and we are outspending every nation at astronomical rates. Who is the war on terror about anyway? Stateless organizations whom hide in caves and target random civilians around the globe. Isnt that a threat to all nations? Why do they not allocate the resources that we do?

It just doesn’t seem to make sense. To fight such an enemy that is no more dangerous or powerful than a drug cartel using conventional warfare with cold war spending and tactics. How we cannot connect these dots is astounding if it wasn’t so downright intellectually offensive.

Hi, I my name is DOD and Im a bloated bureaucracy ...

Part 1 of a 3 part story on the Department of Defense and its coming to the realization of its own shortcomings and the realities it faces; and the motivation for those that will not go down swinging.

It appears the Department of Defense annual increasing budget; coupled with the unsuitability of our foreign policy is finally starting to coalesce. Later this week, Defense Secretary Leon Panetta will unveil $450 Billion in cuts over at least a 10 year span. If we remember, it was the “supercommittee” last fall who were supposed to put together cost cutting measures that would help reduce the deficit (through in part) of $600 Billion in defense cuts.
The “supercommittee” that President Obama put together to reduce the federal deficit of 1.2 Trillion dollars over ten years went up in smoke as we seen unfold back in November of last year. So, the default 1.2 Trillion reductions will take effect effective in 2013 unless Congress can work it out before then. Knowing Congress has been a huge failure, one that seems to trip on its own feet at every step - 2013 is the only option.
Then, to try and blunt the coming hatchet, Panetta went on the offensive. Panetta has said the 600 Billion cuts coming would be like: "we'd be shooting ourselves in the head." That however seems just a tad heightened dose of hyperbole if you consider what 450 Billion actually amounts to in context of the sum of fighting two wars and the base cost of the defense’s annual budget (excluding wars and nukes) over that span.
According to the New York Times, its about 8 percent of that sum. Now quick… what would it be versus the proposed cuts to enter in 2013 automatically? It is only 10.6% of the stated total cost - hardly earth shattering are those 2.5 points in the grand scheme of things now is it?
But why is 2.5% such a drastic change? What in that 150 Billion over 10+ years is so damaging? Something just doesnt make sense in all of this or does it?

Blue, white... and red? Is the US on the same path of Greece?

With Greece out on the corner whoring for another bailout and Standard and Poor yesterday lowering Greece’s credit rating to CCC (the lowest in the world) joining Moodys, who dropped Greece two weeks ago… it’s a great time to reflect. Or fittingly enough hold up a mirror to ourselves. Could the mighty US ever be in the same mess the Greeks find themselves in now? They are socialists you say and we’re capitalists, surly that couldn’t happen. Or Could it?

The Greek GDP is 329 Billion (2009). Obviously its not Rwanda. But let’s put that into perspective. The 2009 revenue of Wal-Mart was over 400 Billion. Wal-Marts annual revenue surpassed 174 nations that year. And being Wal Mart is just one company in the US, it gives you a feel for how truly large and powerful we are. So much so, that the US GDP is nearly three times its nearest competitor standing at 14.2 Trillion.

What separates the US from Greece? Sure we collectively output 45X in a year then they do collectively, but our external debt to GDP ratio is 100% on the nose as of tonight’s check. What we have that Greece don’t have is simple. We have a printing press. Our currency is traded throughout the world as the default currency. All we have to do is print our recovery (at the expense of massive inflation of course amongst other undesirables). The Greeks have to rely on a bailout from the European Union or default and declare bankruptcy. In many ways bankruptcy isn’t a bad thing for Greece. Because the sooner they can weed out mal-investment, waste and become more efficient the sooner they can get started in rebuilding. We on the other hand are so disillusioned our reckoning is going to be a lot slower and much much more painful.

So Greece having to default on its debt is one thing, for us to do it… that surly would send a ripple effect throughout the world. And that’s where the conversation truly ends. That’s where you get into raising the debt ceiling. Because after all, its not just the Chinese holding debt, its average Americans too. We can stick it to those red chinamen… but we refuse to and won’t default on Grandma Sherley. I mean, Standard & Poor's may be forced to take away our AAA credit rating, or what basically what amounts to as being a credit card with no limit!

At the current rate, in a few months we will start to default on our debt. The disease of debt and living beyond our means at a national level are over. The diagnosis isn’t going to change. The treatment is the only choice we have. Take the medicine now by choice, or be forced to do it later. And we have two responsible options to do this now and one irresponsible one that will only make things worse.

We can default on our debts and admit to the world and to ourselves that we are living well beyond our means or raise taxes and pay our way. If our 2011 budget deficit is 1.6 Trillion and we have roughly 160 million working Americans, all we will need is 10g per working American to cover this years shortcoming (hows that for stimulating the economy, suck 1.6 trillion out of citizens hands and into the coffers of out of control and out of touch government).

Or we can do what what politicians always are in favor of doing, and that is to let the next guy worry about it and continue to kick the can down the road, raise the debt ceiling, creating an oncoming tsunami at what point could be a country in total chaos. Lets see what kind of chutzpah these elected “leaders” have the rest of this summer. Based on past results, i dont think the shoe business should need a bailout.