Candidate Obama said he would “transform the Untied States of America” and unfortunately this is the one promise he kept. Two and one half years into his presidency, the National Debt has climbed to 100% of our Gross Domestic Product (GDP) for the first time since World War II; GDP growth for the first six months of this year has been a meager 0.8%; we continue to run a $1.5 trillion annual deficit, essentially growing the Debt by 10% versus the 0.8% GDP growth; 25 million Americans are unemployed, under-employed or have dropped out of the work force; 45 million Americans are on food stamps; and now Standard & Poor’s (S&P) has downgraded our country’s credit rating from AAA to AA+ for the first time in our history. America has truly been transformed!
I could add to this list a number of foreign policy decisions that have elevated our enemies and trashed our long-time allies, but the economic failures of this president are more striking and more easily understood. His $900 billion economic stimulus bill did little more than pay the salaries of state workers for one year and increased the Debt. His re-distributive one-time programs of cash for clunkers and mortgage-restructuring failed and added to the Debt. The overbearing healthcare legislation, that the Congressional Budget Office now says will increase the cost of healthcare, did nothing but create uncertainty for business. Massive new and restrictive regulations from the Environmental Protection Agency (EPA) and Congress, when under full Democratic control, has forced private capital to the sidelines and almost completely stalled economic growth. These are only some examples of Mr. Obama’s transformation of our country.
S&P warned us several months ago that our credit rating was in danger of a downgrade and pointed to the lack of leadership in Washington, D.C. as the main problem. Mr. Obama still does not get it. His reaction to the weak GDP growth and recent slide in the equities markets was to blame the earthquake in Japan, the economic problems in Europe and the uprisings that formed the Arab Spring. His supporters are already saying publicly that Obama inherited a situation that was “worse than we thought.” Translation - blame former President Bush. Mr. Obama will not take responsibility for a failing economy that he has managed since January of 2009 and it is this clear lack of leadership that is at the root of S&P’s downgrade.
The truth is that Mr. Obama’s socialist experiment of hyper-spending has done nothing more than add $4.5 trillion, or 45%, to the Debt since taking office. He has over regulated the economy into a private sector coma. It is time for real leadership and a return to free market capitalism. S&P made that clear with its downgrade.
Let me be fair, however, and bring Congress into this conversation. The recent deal to increase the debt ceiling was a joke and S&P’s downgrade says just that. The small amount of near-term spending cuts are less than $30 billion this year and the amount of cutting over the next ten years, even if the bipartisan committee is successful, will still result in growing the Debt to over $22 trillion. Making the situation worse is that all of the projections assume that our GDP will grow an average of 2.5% per year over those ten years. The 0.8% growth for the first six months of 2011 already puts those projections in a hole. One other important fact is that even if 2.5% GDP growth per year is achieved, that is not enough growth to reduce the real unemployment rate. A 5% annual growth rate in GDP is necessary to take an absolute 1% off of the unemployment rate.
With the exception of the principled eighty-five TEA Party backed representative in the House and the three in the Senate, all of whom have been demonized by the Democrats and the main stream media for their principles, the rest of the establishment Congress has shown no real leadership. S&P’s downgrade is all about this lack of leadership in Washington and they put that in writing in their press release with
“....we see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections.”
A true leader would rise above all of this; would not look for someone to blame; would accept responsibility after almost three years in office; and would put the nation ahead of his own ambitions. Unfortunately, Mr. Obama has shown that he is either unwilling or unable to lead.
The future of our nation’s prosperity and our nation’s liberty depends on real leadership. The best way for government to lead in response to the S&P is to address the rapidly growing future costs of all entitlement spending; flatten the tax rate; lift restrictive regulation; repeal the faulty healthcare law and its enormous economic uncertainty; and get out of the way of the private sector. The American people will do the rest.
Robert Allen Bonelli is the author of “Liberty Rising,” an accomplished business executive, public speaker and involved citizen.