The vaunted U.S. economy, long seen as the healthiest and strongest in the world, is suddenly viewed as being in trouble. Republicans and Democrats alike are warning that the economic honeymoon may be on hold, and the more alarmist among them are even using the dreaded R word to describe where we may be headed.
They may be right. There may be a recession waiting in the wings. The debt bomb is finally exploding.
For a long time now, many Americans have been sinking deeper and deeper into the quicksand of debt, struggling to meet their ordinary living expenses by punting them into the future — putting many of their current payment expenses on their credit cards. This method of meeting present debt by incurring future debt, is a boomerang solution that it will sooner or later come back and smack you square in your pocketbook.
Added to that is the current foreclosure crisis, created mainly not by the subprime mortgage process whereby home buyers committed themselves to make monthly payments they could not afford mainly because they were already up to their ears in credit card debt — a problem the subprime lenders simply ignored. The credit unworthy were magically transformed into no-risk borrowers.
If all of this leads us into a recession, the blame for it will be laid at a myriad of doors, and all sorts of whacky solutions will be employed such as the deal hammered out between the White House and the congressional Democrats to hand out tens of billions of dollars to people who paid taxes by sending them so-called tax rebates, and what are nothing less than welfare payments to the 40 percent of Americans who didn't pay income taxes.
The recipients would be expected to take the money and go out on a shopping spree, thus boosting the economy until it can get back on its own two feet.
Current talk centers around the recipients getting up to $1,200 or $1,600 for families and $300 to $600 to individuals. One has to ask, if putting that small amount of money into the hands of consumers would boost the economy, why be so cheap? Why not double the effect by doubling the handouts?
For that matter, why no go whole hog and send everybody, taxpayers and non-taxpayers alike, a million bucks apiece. What a shopping spree that would be, even if it resulted in hiking the price of gasoline at the pump to $10,000 a gallon.
After all, if the government hasn't got the funds to send out small amounts of money and has to go into hock to get it, why not just borrow a lot more while we're at it. After all, we won't have to cough up the cash to repay it, we can just leave it to our great-grandchildren to pay the piper.
The tragedy here is that the answer to America's economic problems is lying right there in front of us: Remove the shackles that are preventing the most creative, resourceful, industrious and productive people on the face of the earth from doing what they once did to make the United States of America the wealthiest and most powerful nation in all the world's history.
We fastened those shackles around our own necks and only we can tear them off. If we do we would experience an economic boom unlike any ever seen before.
What am I talking about?
Consider: According to Michael Hodges' Grandfather Economic Reports (http://mwhodges.home.att.net/regulation_a.htm): Complying with government regulations consumes $1.4 Trillion ($1,028 billion federal mandates, $343 billion state and local government mandates) 14.9 percent of the economy — $4,680 per man, woman and child. Adding this regulation cost to $13,568 government spending per person, equates to $18,248 per person of government impact, And compliance costs small business more per employee than big business And this does not count compliance cost impacts of the Patriot Act and Sarbanes-Oxley regulations Federal expenditures on regulatory activity increased 2.7 times faster than economic growth since 1960 — at 14 percent per year compounded. Of $1.371 trillion total regulatory costs, federal regulatory compliance costs are 1.028 trillion (incl. About $200 billion for paperwork just complying with tax codes, which is rapidly increasing); state and local government compliance costs are estimated at $343 billion.
Although these figures were valid as of 2004, they reflect the full picture and are no doubt far greater today.
According to Michael Hodges, "These Government mandated regulatory compliance costs are huge amounts: as much as all spending by state and local governments (education, police, welfare, etc.), or twice as much as social security and Medicare spending, or 3 times more than national defense. And, government does not budget or account for these huge costs — although $100 hammers are accounted.
"Despite congressional mandates, government has been dragging its feet for years to account, measure and control — thereby placing the economics of our young generation at incalculable risk.
"If a nation has a goal of continually increasing real income & economic living standards for its citizens, plus a strong currency and positive international trade balance, it must make sure its free-market private sector is by far the largest and growing share of the national economy.
"The larger the section of the economy that is consumed by government spending, and the higher the regulatory costs mandated, the smaller the effective share of the economic pie remaining to the 'free-market private' sector."
The fact of the matter is we can easily do without most of the government spending and regulations strangling us, yet we're about to add to them with new and even more crippling restrictions designed to stop a non-existent threat — global warming.
Stopping runaway spending and excessive regulations will put our economic engine back on the tracks and speeding down the rails to an economic boom undreamed of by the most optimistic economist.
Failing to act will see this nation rapidly achieve Third World status.
Phil Brennan is a veteran journalist and World War II Marine who writes for Newsmax.com. He is editor and publisher of Wednesday on the Web (http://www.pvbr.com) and was Washington columnist for National Review magazine in the 1960s.
He also served as a staff aide for the House Republican Policy Committee and helped handle the Washington public relations operation for the Alaska Statehood Committee which won statehood for Alaska.
He is also a trustee of the Lincoln Heritage Institute and a member of the Association For Intelligence Officers.
He can be reached at email@example.com
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