Editorial: Congress Must Stop the "Stimulus"
The $825 billion economic “stimulus” plan now being proposed by President Barack Obama and Congressional Democrats could well result in a federal deficit in excess of $2 trillion for 2009. Which means that it is now up to Senate and House Republicans to make certain that the American people are not consigned to a future of permanent serfdom to foreign creditors.
That is, if those creditors will continue to even service the national debt, now totaling nearly $10.7 trillion. That includes $4.3 trillion “owed to ourselves” in the form of Social Security, Medicare, and other obligations. And even more ominously, it also includes $6.4 trillion held privately, $3 trillion of which is held overseas, as reported by the Washington Post on January 3rd. Significantly, 40 percent of the debt held privately is coming due this year, and the only way for the government to pay it is to borrow yet more money.
The Post's article warns that “foreign investors, the largest U.S. creditors, may prove unable to absorb the skyrocketing debt…” And in the January 23rd edition of the Wall Street Journal Euro Pacific Capital president Peter Schiff writes that in order to continue to service the nation's debt, “our creditors must give up all hope of accessing the principal, and may be compensated only by the paltry 2%-3% yield our bonds currently deliver.”
Assuming that this curious status quo will not long be allowed to stand, it is high time for Congressional Republicans to, in the very least, construct a comprehensive alternative to begging foreign powers—including China, currently the nation's largest individual creditor—to pay for America's unsustainable year-to-year expenditures.
This will not be easy. Confidence will not be restored to overseas markets if those markets come to believe that the United States cannot even afford to fund its own gargantuan financial obligations. House Republicans report that they share this fear. But that is not enough. Particularly when President Obama's response to their concerns was an off-handed, “I won.” The critical error by the President and Congress is in assessing the current crisis as some sort of shortage of money in the economy—hence the need for “stimulus”—and not the astronomical debt of government that is burying the nation in financial ruin.
In truth, there is no money shortage, as economist Anna Schwartz reported in October. Quite the opposite: The monetary base has never been larger according to the Fed, and has more than doubled since September. Government spending has never been higher. The debt has never been deeper. And if Congress does not act, taxes will automatically increase by 2010. Congressional Republicans must present a plan that reduces and eventually seeks to eliminate the national debt, slashes spending, and provides permanent tax relief to the American people—before it is too late.
The basic goals of the pork-laden $825 billion package, clearly stated from the legislation itself, are “job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and State and local fiscal stabilization…” Put simply, these are not the fundamental problems with the economy that need fixing. As talk radio host Mark Levin notes on his program every evening, it is the giant, gaping hole in the economy that comes in the form unfunded debt obligations that lead, over time, to higher taxes and higher interest rates on the American people. And should the nation's foreign creditors prove unable to continue servicing that debt, it may well lead to hyperinflation that would make the happy printers of the Weimar Republic blush.
So, now, Congressional Republicans must stop the madness. And they can begin by stopping the “stimulus.” They must stick together and permanently discard the notion that government must “do something” in order to validate their political authority. Otherwise they will be complicit in shackling the American taxpayer to a mountain of foreign debt, that the creditors could call in at any time. Going along with the Democratic alternative will result in a government-run, make-work society, whose currency is thoroughly devalued—and whose foreign creditors look upon the U.S. as little more than a bare-bones carcass from which to pick the final strands off molding flesh.