Take a Deep Breath and Step Back
What America needs today is a recess. Issues are moving across the political stage so rapidly that little time is available for properly analyzing the plot.
Dollars are discussed in a range of trillions. That range is beginning to sound like the dollars are only in billions — if anyone remembers such a minor monetary term.
And the nation has a one-party government that is governing from the left and in some instances the far left with such organizations as ACORN and MoveOn.org nibbling at the edges.
Theatre critics have identified this play as a tragedy.
The New Congressional Budget Office (CBO) offers this analysis: President Obama's budget, as offered, would produce $9.3 trillion in deficits over the next decade. Not so, says CBO, the deficit would be $2.3 trillion more, for a total deficit of $11.6 trillion over the next 10 years. CBO estimates that Obama's budget would generate "deficits averaging almost $1 trillion a year during the years 2010 to 2019. CBO notes that Obama's "policies would never go below 4 percent of the size of the economy, a figure most economists agree is unsustainable. By the end of the decade, the deficits could worsen and exceed 5 percent.
Mark Zandi, chief economist of Moody's Economy.com, observed that such excessive deficits will lead to higher interest rates that will force policymakers to make changes.
House Minority Leader John Boehner, R-Ohio, commented: "This report should serve as a wake-up call this administration needs. We simply cannot continue to mortgage our children and grandchildren's future to pay for bigger and more costly government."
Showcased in the Obama budget are such ambitious programs as an overhaul of the U.S. health system and "cap-and-trade" rules to combat the discredited concept of global warming.
Sen. Bill Nelson, D-Fla., a member of the Senate Budget Committee, says there is a need to "rework this whole thing," referring to the Obama Budget for 2010.
In keeping with the three main themes of the President's budget — environment, health, and education — Sen. Nelson gave a brief budget outline to the Wall Street Journal as follows: "Well, you're going to have to redo healthcare, so that some of its upfront costs are less, so that you bring down the cost over the 10-year period. Likewise, you're going to have to speed up revenues coming in from such things as possibly a cigarette tax — as cap-and-trade — going into climate control."
This trillion-dollar-plus budget is being played out in front of a backdrop of trillions of dollars more in already committed programs.
No. 1 is the Emergency Financial Stabilization Act of 2008, known as TARP, the Troubled Asset Relief Program, enacted to authorize the U.S. secretary of the Treasury to spend up to $700 billion to purchase distressed assets, especially mortgage-backed securities and to make capital injections into banks.
No. 2 is the American Recovery and Reinvestment Act of 2009, known as the "stimulus bill," enacted to provide a boost to the U.S. economy in the wake of the economic turndown. This multipurpose bill was estimated to cost approximately $789 billion.
Later estimates placed the cost of these two projects at approximately $1 trillion each.
The U.S. problems with toxic assets and the fall in the U.S. stock market have not gone unnoticed in world affairs.
The Chinese in particular have been following the economic situation in the United States very closely inasmuch as China is the largest holder of U.S. debt at $740 billion.
Chinese Premier Wen Jiabao on March 13 called for the United States “to guarantee the security of China’s assets.”
China has become so emboldened that it is calling for a new international reserve currency to take the place of the U.S. dollar. Economists believe this is a move by China to improve its role in leadership at the upcoming Group 20 summit next week.
The U.S. dollar has been the primary reserve currency for many years since it replaced the British pound after World War II.
The dollar is the world’s most widely used currency. Crude oil and nearly all the world’s commodities are priced in dollars.
It’s reassuring that the European Union’s top economic official, Joaquin Almunia, had this to say on Tuesday: “The dollar’s role as the international reserve currency is secure despite China’s proposal.”
E. Ralph Hostetter, a prominent businessman and agricultural publisher, also is a national and local award-winning columnist. He welcomes comments by e-mail sent to firstname.lastname@example.org.
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