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Daily
Events...
Thursdays
with John Hayward
New Outlook
a Horror Story
February 5, 2012
The
Congressional Budget Office released its annual Budget and Economic
Outlook
this week. Last year’s was a tragedy, but the new one is a horror
story. The
crushing burden of government debt and persistent unemployment — which,
contrary to the carefully massaged statistics released for public
consumption,
has really been in double digits for years, when the collapsing work
force is
taken into account — will conspire with skyrocketing taxes after the
expiration
of the Bush tax rates, and leave us with only 1.1 percent projected GDP
growth
next year.
The
government is still spending nearly a quarter of the total U.S. economy
every
year, and trillion dollar deficits have become the new normal. In fact,
during
only one year in the CBO’s 10-year projection do we get below a $1
trillion
deficit, and it’s not by much. The government will be spending over $6
trillion
a year by 2022. And none of that accounts for the ticking time bomb of
unfunded
entitlement liabilities, due to Social Security and Medicare, which
Washington
deals with by officially ignoring them.
Macro-economics
and the discussion of public debt often involve numbers so huge that it
makes
our eyes water. Here are some simple numbers to ponder: the health of
the
private sector calls for growth of about three percent, to drive job
creation
commensurate with population increase. Financing our government without
massive
deficits would take more like five percent, and actually resolving the
debt
crisis would demand seven percent growth or more, sustained over many
years.
Our government-controlled economy is completely incapable of reaching
any of
those growth levels. There is no way to make this equation work without
making
the government dramatically smaller.
America
should carefully ponder those difficult growth targets before
entertaining the
notion of another four years under the people who got us to the “new
normal” of
one percent growth. They’re talking about buying a shiny new saddle and
spurs
for a work horse that’s about to drop dead in its tracks.
—John
Hayward
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