Federal Reserve Vice Chairman, Donald Kohn, stated that a roughly 2% inflation rate would be ideal for economic recovery. However, former Fed Chairman Paul Volcker, who crushed double-digit inflation with high interest rates in the early 1980’s, responded, “I don’t get it…[by setting 2% as an inflation objective, the Fed is] telling people that people in a generation that they’re going to be losing half their purchasing power.”
In the recent edition of Reader’s Digest, there’s a section on surviving the economic crisis. One of the bullet points addresses the “gloom and doom” warnings on evaporating Social Security funds. Despite the coming shortfall, which both parties warn about, Reader’s Digest states, “Even in bleak economic scenarios, Social Security will probably pay you 65 to 80 percent of your currently promised benefits.” Talk about low expectations. Since when is getting back only 65% to 80% of your hard earned investment something to cheer about?
Their next solutions were even more telling. “And with some fairly modest changes- like raising the retirement age or increasing payroll taxes for anyone earning more than $250,000 annually- the system can be shored up for decades to come.” In other words, save the system by punishing the taxpayers.
Absent from their proposed solutions is an admonition to cut out of control government spending. Instead of raising retirement ages or increasing taxes on higher income workers, perhaps the government should drastically cut all the pork barrel spending. Perhaps it should cut excess spending, balance its budget, and start paying down national debt. Solutions like those offered by Reader’s Digest enable government profligacy and punish hard working Americans. Government spending, borrowing, and printing are leading to huge shortfalls in key programs.
On the other side of the coin, many conservatives claim that cutting taxes will solve most, if not all, of our economic ills. Tax cuts are great, but only if they are accompanied by spending cuts. The Bush Administration cut taxes, but it doubled the national debt, because the tax cuts were offset by huge increases in government spending.
Small banks are growing more vociferous in their discontent over the Federal Government’s bailouts of “too big to fail” banks. Do they have a valid point?
In order to bail out banking giants like Bank of America and Citigroup and to constantly replenish the FDIC deposit insurance fund, the government is crowding out smaller banks and raising onerous special assessment fees. As a result of Wall St’s greed and inefficiency, thousands of healthy community banks are struggling to survive amidst cumbersome federal regulation and punishing fee hikes.
Critics argue that the fee hikes are critical to salvaging a financial system on the brink of collapse. They also argue that the majority of the 50 banks that have failed since 2008 have been smaller banks. However, this number represents an extremely small percentage of the approximately 8,000 community banks nationwide.
Is government propping up monolithic, inefficient, greedy, and unsuccessful banks at the expense of squashing smaller, more efficient, more prudent, and more successful banks? What if a bunch of these smaller, more sound financial institutions could step in, pick up the slack, and fill the void of a banking conglomerate that has wasted its capital and tapped taxpayer money?
Advocates of massive bank bailouts and sweeping government intervention claim that saving Wall St is the key to saving Main St. But, by rewarding the failure of corporate giants, is the Federal Government just punishing the little guy on Main St?
Read the article here.
President Obama is ordering his Cabinet heads to cut $100 million in wasteful spending. On the positive side, it’s a reduction in federal spending. On the negative side, this cut represents a mere 0.003% of the federal budget.
Did you know that President Obama’s defense budget is virtually identical to that of President Bush’s? In fact, Obama’s defense budget is about 8% higher than last year’s, and in 2010, despite some proposed cuts by a Republican Secretary of Defense, Obama still plans on spending 2% more than President Bush had allocated.
In the big picture, the US has 700 bases in about 130 countries around the world. Obama has no plans to change this policy of funding a gargantuan global empire. On the contrary, Obama plans to spend even more on the military than the previous, Republican administration.
So, why are “conservatives” so angry?
America already spends more on its defense budget than all the other nations of the earth combined. And now, Obama wants to spend even more. But, how is it, that both Republicans and Democrats, want to continue the behemoth military spending when our nation is running back breaking budget deficits?
So-called fiscal conservatives mock and ridicule Obama’s spending spree, yet they refuse to make any concessions on an out of control military budget. You can’t have it both ways. Something has to give.
The truth is, America’s domestic and military budgets are way too big. If our government wants to start paying down debt, balancing the budget, and lowering the tax burden, both domestic AND military spending require drastic cuts.
Perhaps the time has come for self-proclaimed fiscal conservatives to take a long, hard look at American foreign policy. Running a global empire and fighting multiple, open-ended foreign wars cost a lot of money, money the United States just doesn’t have. Maybe it’s time to reconsider the Founding Fathers’ explicit advice on the dangers of becoming a global empire. Maybe it’s time to reconsider the old adage, “It’s about quality, not quantity”. And maybe it’s time to listen to those politicians, CIA officers, and military advisors who believe America can successfully secure its borders and defend against Islamic terrorists without bankrupting itself in the process.
