If Republicans fail to address the legitimate concerns of the tea party movement and political Independents — especially the demand that Washington actually reduce, pay-off, and one day retire the gargantuan $12.4 trillion national debt — they will have simultaneously passed up on an historic opportunity to present a political program that once and for all liberates the people from the bonds of insolvency, and blown the political opportunity of a lifetime.
Right now, to a large degree, political Independents and tea party activists are breaking for Republicans. But, if the GOP believes that these are the seeds for a lasting majority, and that they need not take any action to earn their support, they need to think again.
If, for example, Congressional Republicans now embrace Barack Obama’s dopey debt commission, which will never reduce the debt, or only support half measures over the next year to “reduce the deficit” that, again, will increase and extend what has become a perpetual debt, they will have ceded the true battlefield and laid the groundwork for their own demise, even if they happen to win in 2010.
The annual deficit, which will average more than $1.06 trillion every year for the next ten years under Obama’s budget, is only half of the problem, and necessarily the smaller half. The larger half is the current $12.4 trillion debt that is earning interest — at a time when interest rates are just about ready to go up, and interest owed on the debt will rise to an intractable $840 billion by 2020. The American people will figure out rapidly that the debt is still rising on an annual basis, and they will hold Washington accountable.
Moreover, and likely to draw the ire of Independents and tea parties, Obama’s debt commission is implicitly designed to legitimize and provide political cover for tax increases. Obama, in presenting the commission, said that its purpose is to “cover the costs of all federal programs.” But, since Obama has made off-limits so-called “mandatory” entitlement spending, there are really only two ways to achieve his goal of covering “all federal programs,” both of which will be devastating to the nation’s economic standing and credit-worthiness: either, 1) the Federal Reserve will print the money necessary to fund the growth of entitlements spending, or 2) Congress will raise taxes to confiscatory levels.
Instead, the demands of the political Independents and the tea party movement are clear: 1) stop inflating the debt away; 2) stop raising taxes; 3) balance the budget; and 4) pay off and retire the national debt. In 1776, a Revolution was born in part because the British Empire thought they could punitively tax the colonies to finance the unsustainable obligations of London. It did not work then, and there is no reason to believe that the American people today will accept higher taxes to “cover the costs of all federal programs.” Because, they know intuitively that those programs are unsustainable, and bankrupting the nation to boot.
The American people know that Social Security and Medicare are already in the red. That entitlement spending as a whole is growing faster than the federal budget itself. That the Social Security Trust Fund and other government accounts have already been looted by Congress. That, to sustain Washington’s Keynesian spending binge, the Federal Reserve has repeatedly fired up the printing presses to increase the supply of money, thus weakening the dollar and destroying the purchasing power of hard-working American families. That, in so extending, expanding, and perpetuating the national debt, that the nation’s Triple-A credit rating is now in jeopardy.
And let us never forget the bailouts, the practice of taxpayers assuming the bad debts of others. Rick Santelli’s “shot heard ‘round the world” one year ago today — which inspired the tea party movement — was specifically against the foreclosure bailouts, where homeowners who paid their bills on time and in full were being asked to also assume the costs of their neighbors who were delinquent in their payments and not credit-worthy to begin with.
Finally, and very importantly, many of these policies either began or were exacerbated while a Republican sat in the White House. The $700 billion TARP, perhaps the most unpopular legislation in human history, was a bipartisan bill. The housing bubble inflated the most during the 2000’s and popped in 2007 because of weak lending standards, because Fannie Mae and Freddie Mac sold worthless mortgage-backed securities all throughout the world, and because the Federal Reserve accommodated the bubble with easy money and low interest rates. In short, because of corporatism, or crony capitalism.
But, perhaps most importantly, the crisis happened because the people’s elected representatives did nothing and, still refuse to do anything, to stop it. Fed Chair Ben Bernanke, the architect of the Fed’s easy money policy, has been reconfirmed to a second term at a time when the nation supports a central bank audit. The money supply has more than doubled since the crisis began in 2007. The $3.83 trillion budget proposed will add a record $1.56 trillion to the national debt. The national debt ceiling has now been raised by $1.9 trillion to $14.294 trillion. Congress wants to take over the nation’s entire health care and increase entitlement spending by another $2.5 trillion over ten years when fully implemented. And now, to pay for it all, Barack Obama is laying the groundwork to raise taxes.
The American people are sick and tired of it all. They want leaders in Washington, regardless of their party, to address the unbridled expansion of government, and the decline of their nation — and they want it done now. They know that time is quickly running out. They know that if the government’s off-balance-sheet liabilities were put on-budget, the national debt would already be far in excess of the Gross Domestic Product. They see the sovereign debt crisis spreading throughout the world, and understand the principle that “the bigger they are, the harder they fall.” They know that the nation’s economic superpower status will forever be lost, and the general decline will escalate, when the debt is downgraded.
Republicans have a choice, and over the next year, they will either address the foregoing concerns of the American people, or they will rapidly watch tea party and Independent political support evaporate. They will be held accountable, just as Barack Obama and the Democrat Congress have been held accountable. In less than two years, political support for the current majority party has vanished. The Republicans will have an even shorter string.
The choice is simple, and it is theirs alone: Republicans will either become a part of the solution, or else they will be viewed as a part of the problem. The nation needs a political party that will restore fiscal and monetary sanity to Washington, and there is no time for half measures. For now, political Independents appear to be leaning Republican, but if the GOP fails to act, they will lose both Independent and tea party support. The American people are increasingly not married to political parties; they want action, and are more than willing to take matters into their own hands.
