Zuckerman Loses It, Releases Most Scathing Criticism Of Obama Yet: "The Most Fiscally Irresponsible Government in U.S. History"

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Two days ago, in Mort Zuckerman Laments "The End Of American Optimism", Takes His Criticism Of Obama To A Whole New Level, we assumed out that Mort's critique of Obama, his policies, and his economic team had reached a level that would likely not be surprassed for a long time. Boy were we wrong - one short day later Mort comes out with The Most Fiscally Irresponsible Government in U.S. History: Current federal budget trends are capable of destroying this country. "The United States simply seems to lack a system that can fund the government that the people say they want. We are good at crises, but we do not seem to be good at tackling chronic problems. Obama must know that if he doesn't address this, he will be the president who drove us toward a debt crisis. And so too must Congress, for both have now participated in the most fiscally irresponsible government in American history." Scathing does not do it justice...

As posted in US News

The Most Fiscally Irresponsible Government in U.S. History
Current federal budget trends are capable of destroying this country

There is an instinctive conclusion among the American public that
President Obama's stimulus package has failed to create a sustained
recovery. Unemployment has increased, not declined; consumers have
retrenched; housing starts have crashed along with mortgage
applications; and there is a fear that a double-dip recession may very
well be in the pipeline. The public perception, reflected in Pew
Research/National Journal polls, is that the measures to combat
the Great Recession have mostly helped large banks and financial
institutions, and that's a view common to Republicans (75 percent) and
Democrats (73 percent). Only one third of either political leaning
thinks government policies have done a great deal or a fair amount for
the poor.

Click here to find out more!

There is another instinctive conclusion among the American people. It
is that the national deficit, and the debts we have accumulated, are of
critical political importance. On the national debt, the money the
government has spent without the tax revenues to pay for it has produced
mind-numbing numbers so large as to be disconnected from reality. Zeros
from here to infinity. The sums are hard to describe; it is hard to
describe an elephant, but you know one when you see one. The public
knows that, shuffle the numbers as you may, the level of debt is
unsustainable.

Who could be surprised since millions of voters have discovered that
for themselves? As one realizes the morning after the night before,
there is an unavoidable penalty for excess. It is unnerving to wake up
and learn that you have a mortgage on your home that exceeds the value
of the property. Or, and too often both, you have a credit card line
that you cannot repay and the issuer has you on the rack for ever bigger
compound interest on the debt. The lesson has been well and truly
learned that debt catches up with you. Millions understand that they are
just going to have to find a way to live within their means—and then
still eke out some savings to pay down debt. And there are well over 14
million Americans without a paying job, so the level of discontent is
very high. Just how are they going to regain control of their lives?

In a usnews.com post
on July 26, Jodie Allen of the Pew Research Center reported that in
recent weeks more academic and market economists have been urging the
government to defer budget cuts and tax increases and instead provide
additional stimulus to a still-fragile economy, some by continuing the
Bush tax cuts. But among the public there has been a suggestive shift of
opinion the other way, reflecting worries about debt. "Deficit and
government spending" has jumped from 10th or 11th place as a priority
for the federal government to one that is second only to job creation
and economic growth. The drift of opinion is manifest in other recent
polls. For instance, a CBS poll conducted July 9-12 assessed the most
important problem facing the country as the economy and jobs (38
percent), with concern about the budget deficit and national debt way
down at 5 percent. Yet CNN (July 16-21) has 47 percent preoccupied first
with the economy, and 13 percent with the federal deficit. In a recent Time
magazine poll, two thirds of the respondents say they oppose a second
government stimulus program and more than half say the country would
have been better off without the first one.

People see the stimulus, fashioned and passed by Congress
in such a hurry, as a metaphor for wasted money. They are highly
critical about the lack of discipline among our political leaders. The
question that naturally arises is how to forestall a long-term economic
decline.

The Fed has lowered rates dramatically to keep the economy ticking
and maybe continue the painfully slow recovery, but at the receiving end
there is no feeling of relief at all. People know that the stimulus is
about to stop stimulating. They know that money is petering out. They
know that states are preparing to cut $200 billion to balance their
budgets. They realize that the Great Recession has wiped out huge
amounts of wealth and that, unlike other recessions, this will not be
followed by the kind of economic boom when people who had sat on their
money during the lean years unleash pent-up demand for all sorts of
goods and services.

There is no sign of that happening this time around. Households and
businesses have kept their hands in their pockets. And so while many
think that the only way to revive the economy and to inject more money
into it is through governmental spending, the general feeling is that we
can't afford that right now. The government will be writing more IOUs
on top of those we already can't afford. Why plan a second stimulus if
the first stimulus couldn't prevent high unemployment?

Of course, the question remains whether public sentiment coincides
with sound economics. The challenge we face as a country is how to get
growing vigorously again while achieving fiscal sustainability. We are
learning from the Europeans what happens when the risks that came with
excessive debt become realities. There seems to be an emerging consensus
that if there is to be any additional stimulus, it must be explicitly
linked to credible fiscal restraint down the road. This would include a
commitment to binding legislation that would change the algebra so that
both programs and budget procedures get us on a benign trajectory.

There are two warning signs of a budget crisis: rising debt and the
loss of confidence that the government will deal with it. This
administration is on the verge of fulfilling both conditions. In
fairness, there is no majority coalition in Congress for deficit
reduction today. It is also true that the growth of public debt has been
driven by a dramatic diminution of tax receipts due to the recession,
the extra spending to avoid sinking into a self-perpetuating depression,
and all those billions we invested to save the financial sectors from
their sins. Voters see the politicians most vociferous about reining in
the federal budget as those who are out of power and want to use it
against the majority party. Too many politicians claim they are all for
balanced budgets—but only by reducing the other party's priorities.
Republicans want to reduce social spending. Democrats want to reduce
military spending. It is Washington as usual.

Amid the clamor and counterpromises, the historic record is worth
keeping in mind. We paid for World War II through growth. The national
debt, as a percentage of gross domestic product, fell sharply through
the postwar presidencies of Truman, Eisenhower, Kennedy, and Johnson
(despite the Vietnam War) and continued edging down through most of
Nixon's, rising a little with Ford's. We marked time in the stagflation
of the Carter years, and then the debt percentage increased dramatically
during the Reagan-Bush presidencies. It shot up again to the present
dangerous levels under George W. Bush and Obama. The only good years
were Clinton's.

An old saying that can apply to the deficit is called the "rule of
holes" and goes as follows: "When you're in one, stop digging." But
Washington politics remains the barrier. Government programs seem to
live on forever. The budget becomes a perpetual-motion machine for
higher spending. New programs for new needs get piled on top of old
programs for old needs.

Then there are the retirees. Their numbers and their health costs
will keep on rising. There were 35 million Americans over 65 in 2000 and
the number of retirees is expected to double by 2030. The impending
retirement of millions of baby boomers, with their claims on federal
retirement programs, comes at a time when both parties seem to be
willing to worsen tomorrow's problems to win more of today's votes. The
result is that the federal budget is drifting into a future of huge
deficits or unprecedented tax increases, or both.

Federal spending is moving toward a higher plateau—from roughly 18
percent of the GDP to almost 25 percent by 2030. We don't know how we
are going to pay for this. We don't know how the economy would fare with
much higher taxes. We have seen the clouds gathering for years but
haven't invested in an umbrella by adjusting federal retirement programs
or taking other steps to reduce entitlements. One response would have
been to begin gradually phasing in eligibility ages and tying benefits
more to income. No doubt we have to think about raising the eligibility
age for Social Security and Medicare, perhaps by one month for each
two-month increase in average life expectancy. We will have to think of
ways to reduce the cost-of-living increases on Social Security benefits
for wealthy seniors by slowly increasing their Medicare premiums and
leaving everybody else's untouched. We may have to allow the Bush tax
cuts to expire, certainly for households earning more than $250,000 (and
more for the super-rich) given the concentration of wealth in the top 1
percent of the population. It is entirely appropriate that they begin
to make a greater contribution to our longer-term fiscal health.

The United States simply seems to lack a system that can fund the
government that the people say they want. We are good at crises, but we
do not seem to be good at tackling chronic problems. If we wait until a
crisis happens, it will be too late. It is simply not possible to close
the gap entirely with the tax increases on the rich that Democratic
liberals so desperately believe in. Nor can we close the gap with
spending cuts, as the Republicans would like. The liberals will have to
concede that benefits and spending ought to be reduced. Conservatives
will have to concede the need for higher taxes.

Hope may lie in a new bipartisan panel headed by Erskine Bowles and
Alan Simpson, two unique, wise, and centrist political leaders whose
characters raise some degree of confidence that they might be able to
come forth with productive programs. As former President Clinton said of
them, they "are free enough to disregard the polls but smart enough to
take them into account."

But let's not forget, current budgetary trends are capable of destroying the country. As Bowles pointed out, according to a Washington Post
report, we can't just grow our way out of this. We can't just tax our
way out of this. We have to do what governors do—cut spending or
increase revenues in some combination that will begin to pull us back
from the cliff.

Obama must know that if he doesn't address this, he will be the
president who drove us toward a debt crisis. And so too must Congress,
for both have now participated in the most fiscally irresponsible
government in American history.