Monday, April 20, 2009

The reason for the Tea Parties

Suppose there was a man whose life wasn’t exactly what he wanted from a material standpoint. Bills were being paid but nothing more. So he decides to charge it, and takes out a credit card with – amazingly – an unlimited line of credit. He spends and spends. He buys a lot of nice things that make his life more comfortable, and in the process he runs up the balance on his brand new credit card to astronomical levels. In fact, he runs the balance up so high that the monthly interest that accrues on that balance is more than his monthly income. His debt is essentially unsustainable and something must be done. Giving back all the wonderful things that he has purchased is out of the question, and bankruptcy is not an option because this guy is really important to those around him. So, he simply transfers the debt to his son who isn’t even old enough to have a job. Once this young man enters the workforce, he will be overburdened by massive debt before he earns his first paycheck. His chances of digging out of this debt – run up by his father – are slim, as is an economically prosperous life.

Most of us would be appalled if one of our friends or neighbors did this to their children. But that’s exactly what our federal government has done, and many of us don’t even realize it. That, my friends, is what sparked the hundreds of Tea Parties nationwide last week.

I don’t claim to be a grassroots spokesman. But I do network a great deal and I’m constantly interacting with people who all share the same sentiment. We are overspending on a grand scale and we’re mortgaging the future of the next generation in the process. Granted, many people were protesting many different things last week, but by far the vast majority of the people are very angry over what’s happened in Washington over the past 6-9 months. Even here in Texas where the local economy remains strong and unemployment low, the people are very angry about it. This movement isn’t driven by the frustration of disgruntled citizens victimized by a bad economy. This movement is driven by parents and grandparents who see what we’re doing to the next generation and are furious about it. And in some cases the next generation is taking part in the protests themselves.

The latest federal budget will amass massive deficit spending aimed at reversing the course of the economy. This deficit spending over the next ten years will add up to nearly $10 trillion in national debt and it will be spent WITHOUT THE CONSENT OF THE AMERICAN PEOPLE! That is a number that most of us can’t even fathom. It is huge, more debt than has been accumulated by every President from Washington to Bush COMBINED. To clarify a few terms: “budget deficit” is the amount of money that is spent each year beyond what is taken in from the treasury; “national debt” is the total amount of money that we owe from all the years of overspending, plus interest. When Congress spends more than it takes in, we have to borrow money from other countries who purchase our debt in the form of treasury bonds. The US still has a good credit rating so these bonds are considered good investments, and pay a healthy interest rate. But eventually that debt comes due.

The interest alone on our $10 Trillion debt will be unsustainable. The Freedom Foundation has recently shown that if you are 20 years old today, you will pay $114,000 in NEW/ADDITIONAL taxes just to pay the interest on our massive debt – without paying one penny of the principle.

Americans aren’t stupid. Today, Congress and Obama tell us that they are “cutting taxes” by giving out tax rebates. But the fact is that when our debt must be paid, it will be paid by: 1) higher taxes, and/or 2) printing more money.

The taxation that is in our future will be incomprehensible. The WSJ used recent IRS records to show that even if we taxed people at 100%, and taxed EVERY citizen who makes over 75K a year at 100%, we STILL wouldn’t be able to pay for the spending that Congress is pushing. So taxes alone won’t be enough. We’ll have to print more money to meet our financial obligations, which means inflation. Simply put, the more money we print the less it is worth. This means the value of the dollar in our wallet will drop, and the price of a loaf of bread will skyrocket. It’s simple economics.

When asked about the debt, Obama brushes questions aside. He has no explanation for reducing it. His only answer is that he will cut deficit spending in half by the end of his first term. In other words, he will overspend by half as much four years from now. That doesn’t make us feel better. Regarding the debt, he has no answer. Obama is gambling on economic recovery. He believes that spending massive amounts will reverse the economy and get us rolling again. The subsequent boom will mean more tax receipts into the federal treasury and thus less deficit spending. This is a theory, and has NEVER happened in human history. NOT ONCE has massive government spending led to long-term economic prosperity…NOT ONCE! So Obama is taking a huge risk, and he’s rolling the dice with our children’s future. Chances are, the short term economy will improve – it’s hard not to see some kind of bounce with the amount of money he’s about to dump into the economy – but at great cost. Even the Congessional Budget Office forecasts short-term improvement with long-term consequences, and the CBO is a non-partisan group that usually puts out reliable data. Obama may be able to improve the economy long enough to win a second term, but the following years will see unprecedented inflation, massive taxation, and the value of the dollar plummeting. By the time our kids start working, the majority of their labor will be going to the federal government and to the foreign nations that hold our debt. It’s enough to make you weep for what we’re doing to our kids.

But if he’s asked about it, Obama will say that we HAVE to do something drastic now to improve the economy. If we don’t do these kinds of things we will experience more difficult times. True enough. If companies like AIG, Citi or GM go under, it will be hard. We may even slip into a full-blown depression. But we would emerge, and we would emerge without astronomical debt that would be passed to the next generation. Obama tells us that we must act to help OUR economy, but that amounts to screwing our kids in order to save our own hides and avoid enduring tough times. There’s no other way to put it. John McCain calls it “generational theft”.

This is not a partisan thing. Both parties are responsible. Bush started this nonsense and Congress has allowed it. Obama promised change, but he didn’t deliver. The Dems were voted into office because of backlash against massive government spending, but they misinterpreted their takeover as a nationwide endorsement of Liberal tax-and-spend policies. So instead of reversing what the GOP did, they have decided to multiply it exponentially, and Obama is right there with them. We voted for change, and Obama has followed Bush’s presidency with even more spending. And we’re furious about it.

We have a lot of economic problems that need to be addressed. But NO ONE in Congress is addressing them. Instead, they give the appearance of solving problems by spending large amounts of money, but that doesn’t solve anything. It’s a band-aid and nothing more. The actual problem is just being kicked down to the next generation. If there is one thing we’ve done as a nation it’s to make our country a better place for the next generation. Even if that means enduring hard times, we’ve done it in order to give our children a better life. Not today. Today we’re focused on the here and now, to hell with the next generation. Congress is spending massive amounts of money, passing this debt to our children and they have done it WITHOUT THE CONSENT OF THE AMERICAN PEOPLE!!!! Even when we voice our opposition they ignore us. They are focused only on fixing the economy long enough for the next election. By the time the debt has to be paid they will be long gone. There is nothing more despicable.

The Tea Parties represent a grass roots movement, even if our elected leaders refuse to acknowledge it. We view the coming debt as oppressive, as something that will deprive our children of the “pursuit of happiness” that Jefferson said was a God-given right. The coming taxation will enslave us to the government, and to the foreign nations that hold our debt.

That’s the reason for the Tea Parties, and I think more people agree with us than has been reported. It’s a movement worthy of supporting and I encourage Americans to voice their frustration with their elected leaders. All elected officials need to hear this, from your city council to your Congressional representatives. Everyone needs to be accountable. If I had my way, ALL incumbents would be voted out in the next election cycle, even those who objected to the spending simply because they obviously haven’t objected enough. The government derives its power from the people and the people need to regain that power. We do NOT consent to the actions of our politicians. We do NOT consent to massive deficit spending and astronomical levels of debt. We don’t care if it makes our lives better, we’re focused on the next generation, and our elected officials should be as well.


Auntyem said...

Bravo, John.

Americans have grown too complacent, thinking they NEED SUV's, McMansions, no one wants to take public transportation, they don't participate or volunteer outside their own interests, the younger generations don't vote, don't bother to call, e-mail, much less write to their congress people.

Too many on drugs, addicted to porn, etc. A big segment of the population from billionaires to the blue-collars don't care if things go to hell in a hand-basket; instant gratification is all they want. They don't plan for the future.

Obama is having his first cabinet meeting about cutting spending. He is a father too, and people in his cabinet have kids too. I'm sure they want to ensure their future too.

Port Orchard, WA


Dr John,

Your 'tax & spend', and the national debt to be shouldered by future generations, was quite good. Your message was crystal clear.
Idle chatter about billionaires, the dope & porn addicts, and the personal lives of politicians adds absolutely nothing, has no relationship to the main emphasis of the post.

It's just another inane shot to divert attention away from the obscene cruelty and disservice offered up by Obama's one-track financial advisors. reb

Anonymous said...

I haven't heard any alternatives to the bailout plan.

My analysis is that w/o the bailout, the U.S. would become a third world country almost overnight.

Certainly Obama's plan is a gamble. but what is the alternative?

I am somewhat encouraged by the fact that the U.S. managed to recover from the last fiasco, that being the S&L crisis that occured on Reagan's watch and was also the result of deregulation.

The question is whether our economy has evolved into some type of animal, like the Giant Auroch, which, given environmental conditions, is bound to become extinct.

N.B. I am not suggesting capitalism will become extinct, but it seems to me that our econnomy was/is largely based on consumerism and packaging debt.

If we let GM go under, are we helping ourselves?


John Washburn said...


I think you exaggerated a bit. Without the bailout our economy would have taken a big hit, no doubt. We probably would've slipped into a 30s style depression. But we emerged from that depression and would have emerged again. A third world country? I just don't think so.

Lending would have frozen for a while and lots of jobs would have been lost, but the dollar would have remained strong and we wouldn't have sunk into massive debt.

I foolishly supported the bailout because I put too much trust in Bush. Big mistake. It will never happen again. The alternative is quite bailout. Let these companies fail because they must. The economy would recover and we would emerge stronger because of it.

Instead, we passed the problem to our kids and that disturbs me. Speaking of no alternatives, I have yet to hear anyone talk about how we're going to improve the future for the next generation.

Third world country? No. We have the largest economy on the planet. It wouldn't have been that bad. Besides, third world countries have currencies that are worthless, which is where the dollar is headed once the inflation that Obama has initiated kicks in.

Perhaps the market would have plummeted, but then again it did that anyway. Perhaps banks would have stopped lending money, but then again they did that anyway. Perhaps lots of jobs would have been lost, but...well you get the point. It wouldn't have been as bad as you suggest.

And, yes, deregulation will lead to occasional problems with corruption and the occasional recession. But capitalism in general still produces more wealth and more prosperity and more advancement of the human condition than any other economic system in existence. No system is perfect, but capitalism is the best option available. Why we would voluntarily choose another is beyond me.

John Washburn said...


Just out of curiosity, why is it a bad thing that our economy is based on consumerism? Seems to me that a successful economy would be based on nothing else. After all, the basis of any economy involves spending money and consuming goods and services. What alternative is there?

Consumers drive the market, vendors provide goods and services to the consumer. Consumer demand improves the market through competition while vendors improve their goods and services to meet consumer demand. It's a self-perpetuating cycle. What is wrong with that exactly?

Seems to me there isn't much of a problem until the government interferes with process and essentially interrupts the cycle.


Loop Garoo! Has anyone else noticed? Just lately, Obama is spending a lot of words on Power Generation, with Wind & Solar, and "Clean Coal"? Nothing about abundent Natural Gas.

And, dead silence on nuclear power generation; the cleanest, and most efficient of all the long-term options.

Obama's Plan, Wind & Solar is not a gamble, Loop. It's Crash & Burn. Willie Nelson's bio-diesel is a bit better than that. If we allow OPEC to strangle this free economy, we're third-world for certain! reb

Anonymous said...


Please understand that I am not anti capitalism. I agree that there is nothing wrong w/ consumerism provided it does not become a disproportionately large part of the economy, which it did become.

Check out Kevin Phillips' "Bad Money: The Global Crissi of American Capitalism." If you Google "Bad Money Kevin Phillips" you can watch a you tube of Phillips speaking about his book.