Thursday, September 15, 2011

Politicians Use Credit To Buy Votes

Some where along the line, politicians of all political parties, in most countries, figured out that they could use credit to buy votes.  So rather than just selling government bonds to fund long term assets like schools, bridges, roads etc. politicians have been funding entitlements and normal government operating expenses by selling bonds, which is credit.  In other words, our illustrious elected officials have been taking out a mortgage every year to pay the government's bills.  In the United States, our government is now borrowing about 40 cents for every dollar that it spends in order to have both guns and butter.  Hence, today the US has an official National Debt of about $15 trillion dollars that will grow to $16.7 trillion in the next few years, with no end in sight.   US National Debt is now equivalent to our annual Gross Domestic Product. 

Many other countries have a similar level of debt, or even more, as a percentage of their Gross Domestic Product.   In addition, as the US government invented Social Security in the 30's and Medicare and Medicaid in the 60's and state and federal pensions, which are outside Social Security, our elected officials of both political parties failed to properly fund these programs.  In fact, they stole the money contributed for these programs and spent it on annual operating expenses, as well.  So there is another $100 trillion, or more of unfunded liability, sitting out there just waiting to explode on the American people.  Other countries have the same problem. 

So the world is sitting on a mountain of unsustainable debt that is the result of reckless government spending and politicians buying votes to win elections.  Europe is in crisis because various countries in Europe have National Debt that will be impossible to repay.   The same is true for the US.   These countries, including the US, just keep rolling over the debt, that is borrowing more money to pay the interest on the debt.  The principal itself is never repaid.   This is fiscal insanity.   The fact is that government bonds should only be used, if at all, to pay for long term assets like schools, bridges, roads etc and perhaps to fund wars that are necessary to national survival.   To use government bonds to fund annual operating expenses is a road to financial disaster.   That is where we are today. 

It is very clear that as part of the process of taking back our country in 2012 and 2014, we must amend our Constitution to make sure that this kind of reckless borrowing never happens again.   We cannot allow our elected officials to bankrupt our country just to stay in power.  We must have a Balanced Budget Constitutional Amendment that prohibits long term borrowing to fund normal annual operating expenses.   And, we must cap the size of government at no more than 17 or 18% of GDP.   Under Socialist President Obama, the size of government has grown to 25% of GDP and when local and state governments are included, it is about 40% of GDP.   This level of government is inconsistent with a free market economy.   This size of government is killing jobs in the private sector, which is the reason our unemployment rate is so high. 

President Obama's answer to unemployment is to grow government even bigger when government is the problem not the solution.   Our elected representatives of both political parties have proven over and over again that they cannot be trusted to protect the interests of the American people.  The same is true in many other countries.  Many of the members of Congress, that have been feeding at the trough for years, should be in jail, not in Congress for their part in bankrupting our country.   WE THE PEOPLE cannot allow this to continue.   We must take back some of the power we have delegated to our elected officials.   We need more checks and balances on abuse of power and deficit spending to buy votes.   This has got to stop and soon. 

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