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  • Morning Bell: Can We Avoid Becoming Europe?

    The Treasury Department announced yesterday that the federal deficit for April soared to $82.69 billion, more than twice the $40 billion deficit that Wall Street economists had predicted. An April deficit is rare for the federal government (there has been a surplus in 43 out of the past 56 years) and the announcement marked a record 19th consecutive month that the Treasury has posted a shortfall. Like those who said there was no housing bubble, some on the left who crave an ever larger federal government are still saying that Americans have nothing to worry about. That we can borrow and spend forever. But many in the center left are beginning to wonder if emulating Europe, as President Barack Obama’s policies are pushing us to today, is such a wise policy.

    The Washington Post reported on its front page that the bailout of Greece was forcing “European governments [to] rewrite a post-World War II social contract that has been generous to workers and retirees but has become increasingly unaffordable for an aging population.” And a New York Times headline blared In Greek Debt Crisis, Some See Parallels to U.S. with David Leonhardt reporting: “The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.”

    To put it simply: European economic growth simply has not risen fast enough to support European government spending. The economic literature clearly establishes that a large and growing government is not conducive to better economic performance. Just take a look at this chart comparing Gross Domestic Product (GDP) purchasing power parity (PPP) per capita numbers for European countries compared to U.S. States. For two generations after post-war reconstruction, Europe and America have moved in different economic directions. The American model favored growth, income and vibrancy; the European model was said to favor fairness, equality and stability. Germany may be the economic powerhouse of Europe that is bailing out Greece, but the average residents of 45 U.S. states are richer than the average German.

    If we want to avoid Europe’s fate, we must drastically cut federal spending. Since World War II, federal spending has generally remained between 18 and 22 percent of GDP. During the Bush Administration, spending increased from 18.4 to 20.9 percent of GDP. But under President Barack Obama’s policies, federal spending reached 24.7 percent of GDP in 2009 — the highest level in American history outside of World War II. And President Obama’s budgets will only make the problem worse. Before the recession, federal spending totaled $24,000 per U.S. household. President Obama would hike it to $36,000 per household by 2020 — an inflation-adjusted $12,000-per-household expansion of government. Commenting on President Obama’s budget, Rep. Paul Ryan (R-WI) tells National Review Online: “This budget presents a choice of two futures. … This budget is about more than specific programs or policies. It is really about the American idea, and whether we want to move towards a European-style welfare state.”

    There is another way. Simply bringing real federal spending back to the inflation adjusted $21,000 per household average that prevailed in the 1980s and 1990s would balance the budget by 2012 without raising a single tax on anyone. Even returning spending to the pre-recession level of 20 percent of GDP would eliminate two-thirds of the projected 2019 budget deficit without raising taxes.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    32 Responses to Morning Bell: Can We Avoid Becoming Europe?

    1. J.C. Hughes, Texas says:

      Conn, again an appropriate photo. The Greek Temple image foretells the State of the Union is things don't turn around this November.

    2. Glory, Texas says:

      Personally, I think that the present 'regime' will make sure there is no other president in 2012…killing the COnstition is their main goal…

      Stupidity is easy to maneuver. Only the strong survive.

    3. Richard Cancemi, Arl says:

      To avoid becoming Europe, all we have to do is vote out every Liberal Progressive in November and kick out Obama in 2012. The America House needs cleaning badly. It is filled with vermin and the stench of corruption. Retake America and all it (should) stands for. We have been, and will again be, better than Europe ever was towards its peoples!

    4. James, Houston, TX says:

      My parents were wise business owners. Mother summed up both our household and business economies in one simple phrase: "If you out-go exceeds your income, your upkeep will be your downfall!" Nothing in the world has changed negating this old sage. So goes Europe, so goes the United States unless this mad regime is stopped!

    5. MJF, CT says:

      24.7% under President Obama? I think that there are more than just President Obama to blame here. The Liberal Congress & Senate have been spending like drunken sailors and they just keep on going! The Pelosi/Reid gravy train is going to have to stop for water somewhere and it better be soon (November 2010). We can keep the President at bay but we have to get rid of these "spend-a-halics" on Capitol Hill.

    6. LeRoy says:

      Obma, wants theUS to fall to our knees! He wants a one world government! I see why so many people dislike him!! I have not talked to ONE person(and we talk to MANY, MANY, people on a regular basis) who want him as president!!! No one wants a governmet likeany of the foreign countries!!!! This government MUST wake up!!!!!Before Obama can put any more of his adgenda in, we must get the Democrats out and any Republicans who want to follow him. He is pushing through as much as he can before the vote comes about in Nov. We cn only hope people are listening. I have never seen such a phoney as Obama!. Still can't believe people fell for his glib speech!! He lies every time he speaks!!

    7. Dave, Provo, UT says:

      But doing what you suggest would cut a lot of cushy government jobs and cause the government labor unions to scream and protest. Start by cutting all Federal employees wages and benefits (including the elected ones) by 10%. That's what had to happen to our local government employees and put a freeze on hiring. Eliminate 25% of all supervisor and management jobs and require job reviews of everyone every year. Fire the slugabeds like the porn watchers PDQ (like what happens to school teachers) Just doing this would reduce our overspending by 30%. Think about it.

    8. Normca says:

      The facts and figures presented cannot be disputed. What I find odd though is the Obama media having a sain moment and discussing the Obama driven economy on the front page. What it must be like to play both sides of a hand. On one they can criticize and on the other, as is usual, they can tout and in the case of one Paul Krugman, push. They will be back to their usual ways tomorrow. And to me, they just make themselves more irrelevant. The only reversal may occur after November, from a Republican controlled House or Senate, who makes a big deal of saying they are banning ear marks.

    9. Ken Jarvis says:

      The Solutions to the RECOVERY is SO SIMPLE

      If we could only get Murdoch, Rush, GOP, HF,

      to JOIN in to HELPING

      the recession would end immediately.

      Now ALL they do is Work 24/7 to destroy America.

      LVKen7@Gmail.com

    10. Blair, Franconia, NH says:

      In a word, no. Why? Because we now have Obamacare, which was shoved down our

      throats whether we liked it or not, which was sold to us under false pretenses. If the

      Obama Administration was a corporation, and Congress its Board Directors, there'd be calls from the shareholders to fire the CEO, (Obama), and the board, (Congress).

      Well, guess what? There is a call from the shareholders to fire the CEO and the board. Who's it from? The voters. The voters are the shareholders of the U.S. Government. We can vote in person, (at the polls), or by proxy, (absentee), in the

      biannual shareholders' meeting, (the mid-term elections), or in the quadrennial shareholders' meeting in November of 2012, (the general election), for new board

      members, (Senators and Congressmen), and a new CEO, (POTUS), to replace those

      in office right now. Nancy Pelosi, in 2006, said that the Democrats, if given a chance, would drain the swamp. Well, they drained the swamp all right, and created a cesspool. What's next, Crazy Cat Lady, an assault on the "Republican

      Culture of Corruption?" You had your chance. In the immortal words of the Lord

      Protector, Oliver Cromwell, to the Long Parliament: "You've been here too long. Now by the Grace of God, go!"

    11. John Roane Sarasota, says:

      No, not with this US Congress and Administration! In fact even if they are replaced it will take only about 10 – 12 years unless all the socialist moves and laws of this Administration and US Congress are reversed and only then.

      So to coin a phrase, “Free Citizens of USA Unite”.

    12. Mary.... WI says:

      Paul Ryan for president in 2012!!!!! Put the current president and administration on trial for treason and kick their butts out of this country. Strip them of all their monetary wealth…..send them to Europe, the Mideast, Venezuela, Cuba or Mexico……see how much they enjoy living in a socialistic country or a country run by dictators.

      Does anyone really believe that Obama will even try and reduce taxes or quit spending other people's money. His mission: Destroy the USA.

    13. Ken Jarvis says:

      What would it take to get YOU to Vote FOR -

      Universal Health Care?

      LVKen7@Gmail.com

    14. Helen House says:

      If only the Congressmen would listen! I don't understand why they continue to allow the President to continually announce more give-aways to other countries when all of our money is borrowed! My only hope is that more and more of the incumbants who are big spenders will get the message as the voters replace them in their offces

    15. John R. Turner, Ariz says:

      Everything that the puppet and his masters have done since January 2009 has been designed to lead the U.S. into an oligarchy with the puppet as a figure head. Health care is no more about protecting U.S. Citizens than re-introducing the Black Plague would be. It is all about power.

      Rusty
      http://constitutiontalk.lefora.com/

    16. Dean, Tulsa, OK says:

      "An April deficit is rare for the federal government (there has been a surplus in 43 out of the past 56 years) …."

      13 April deficits out of 56 is not "rare". Unusual, maybe, but not "rare".

    17. Thor H. Asgardson says:

      Perhaps it would be best if this country were to return to the Hamiltonian model of slapping tariffs on foreign imports, in order to stimulate the return of the nation’s industrial base.

      The strategic goal in all of this, would be to cut the ties of dependency to Europe and usher in the old model of economic independence and self-sufficiency.

      The modern notion that the American taxpayer should be bailing out Wall Street and then move on to the next task of bailing out Greece, is nothing less than institutionalized slavery, not to mention a Mad Hatter’s tea party.

      All talk of “balancing the budget” will come to naught until basic questions are addressed, such as the dissolution of the Federal Reserve.

      "A civilization based on a system of parasitic usury economics will ultimately destroy itself, because fractional-reserve 'banking', combined with compound 'interest', is truly and totally contrary to the modern "Establishment" economic theory that it represents some kind of perpetual-motion machine. Our economic system was not designed to, nor was it intended to, function honorably for the benefit and general prosperity of all; it was specifically designed to create a nation of debt slaves under the control of a molesting central bank. The perpetrators of the system understand fully that it is finite and must inevitably collapse in a state of insoluble debt, but by that point they expect to have gained full and indisputable control over everything. The 450 richest people in the world have financial assets equal to the combined wealth of the 3 billion poorest; half of all humanity. The only possible explanation for this is that the international economic system has been subverted and corrupted by fully intentional activities, directed towards undermining national governments and creating institutionalized, privately-owned central banks throughout the world."

      - [Anonymous]

      The American military is needed to topple the communist regime in Washington, which is a direct threat to national security. The next order of business, will be for the military to go forth and seize the ill-gotten gains of the international bankers.

      Let us hear no more absurd talk regarding “balancing the budget,” until these basic questions which involve freedom and slavery are addressed.

      End the Fed; expel the Mexican occupation army and send the United Nations packing.

    18. Bob Veigel, Arlingto says:

      Can we? Yes, but many changes must be made to accomplish this positive result. 01. Competent, honest, intelligent and America first leadership must be in office in Washington, D.C.. 02. Size of government must be reduced in all areas, people, programs and rules, laws and regulations. 03. The private sector must be unshackled. 04. Social Security and Medicare must be redesigned or eliminated. 05. The public must be informed that government is the cause of problems. Your government is corrupt and broken. 06. Taxes must be low. 07. No more deficit spending budgets. 08. Immigration problem must be resolved. Bye, bye illegals. 09. If government follows this program and you, the American citizen will be willing to accept some adjustments to current 'entitlement's' we can work our way back to financial health and sanity.

      Will we? Based on the above 09. items to be followed, very doubtful.

    19. toledofan says:

      The answers are pretty simple, but yet, they continue to evade the Obama administration. It's sad and kind of scary that we would have a guy in the White House that actually is trying to remake America into something history has shown over and over doesn't work. Greece, Japan, France, Germany, Spain, Californiia are recent examples of failure because of sepnding more than they have. If we developed a flat tax of say 12% and everybody had to pay we could reduce the deficeit as well. I think the solution of going back to the spending rates coupled with a tax law change would be the lifeboat we need. It's too bad the ideology in Washington is too arrogant to know what to do or willing to do what is best for America.

    20. Drew Page, IL says:

      "Can we avoid becoming Europe?" Not as long as Mr. Obama and his crew of liberal supporters are in charge.

      Mr. Obama has a belief that we should all aspire to becoming part of the lowest common denominator. I believe his motives can be found in the book Animal Farm. He wants all animals to be equal, except with some being more equal than others. Unspoken of course is that he and a few of his supporters would be among the "some". Ironically, his encouragement to the American people is the reverse of JFKs. Mr. Obama encourages all to "Ask not what you can do for your country. Ask what your country can do for you."

      Step one of my Hope for Change comes this November. Step two will arrive two years after that.

    21. David Sayers,Goldsbo says:

      Yes, we have to cut spending and shrink the size of government but first we have to throw all the commies out of Washington. In addition, while we're kicking them to the curb we might want to indict a good portion of them. And Comrade Ken, I see you are still in that pesky coma.

    22. bigdave ocala fl says:

      Ken in Vegas, you are almost 80 years old and should you contract cancer or some other form of life threatening illness, under Obamacare here is an asprin, now go home and don't come back. Universal healthcare is like socialism…ok until you run out of other people's money. The TRUTH is all around us! Socialist countries on the verge of IMPLODING look to the US(another socialist country for the past 20 years at least AND ALSO BROKE because of it!) to bail them out and then they look to CAPITALISM to get their country going again!! Obama says the US CAN NOT drill for oil but gives BRAZIL $3,000,000,000 of OUR MONEY so they CAN drill for oil?! This country is being RULED THROUGH SMOKE AND MIRRORS AND OUTRIGHT LIES!! NO OIL/COAL/GAS= NO MANUFACTURING OR PRODUCTION=NO JOBS=NO TAXES=NO MORE GOVERNMENT AND NO MORE SCHOOLS. Whoever is against ALL OUT ENERGY PRODUCTION is ANTI-AMERICAN, ANTI-PEOPLE, ANTI-FAMILIES. How can you provide for a family with no job? No opportunity? Government will be cut in half and soon for us to even consider survival. End all UNIONS( whose name is on your paycheck folks? right..it aint the UNION!). No UNION ever started a business or a company. They ruined a lot of them though…GM anyone? And Obama gave OUR money to the UNION rather than the CREDITORS!?

    23. Southern Girl, MS says:

      It seems that those of us who subscribed to the Heritage Foundation, listen to Rush, Hannity, etc. all think the same and KNOW what must be done. It's those who listen to the left extremists and the media that I worry about. So we have an election this fall. What if it is plagued with corruption as the last one was (Acorn signing up unqualified voters, Black Panthers intimidating voters, etc.) What happened with the vote in Puerto Rico? I haven't heard the results. All of that is a ploy to get more voters for the left. I know how I will vote in November and most people that I know, but I still worry about the corruption that we are dealing with now.

    24. Pingback: Will The USA Be The Next Greece? :The Huntsville Patriot

    25. Tim Jacksonville fl says:

      Single wordscan be applied to the current presidental administration such as Faked, duped, kneejerk, nearsighted, visonless, lightweight, bigoted, cooked, deciver, uninformed, misleading, lacking, wanting, useless, incomplete, socialist, imoral, hiding, unfair, unbalanced, inane, clueless, classist, progressive, spin, etc. As one can see Obama and his speendthrift ways are eaisly pegged by or with any of the above words above and all can apply in myriad fashion when applied to our supposed leader and his sinking ship of state. Two words sum up his term, Lost Cause.Three words can sum up the result of his being voted out of office in 2012 , Oh, happy day!

    26. Ron Tesarik, Lake Fo says:

      I agree completely with this piece, but we need to see a more detailed blueprint for rolling back government spending. The solution of "Simply bringing real federal spending back to the inflation adjusted $21,000 per household…." will not be a simple process. I would like to see Heritage present a detailed, quantified and realistic plan to accomplish this and make a compelling case for implementing that process.

    27. Gray_Stroke in the R says:

      Quit being naive and read "Tragedy and Hope" by Carrolle Quigley, Bill Klinton's mentor……it's all about globalization as the only solution for our social ills and the elite know better then us. Quit asking why Congress will do nothing they know the plan they support globalist agendas…..think about it folks what is: "The Black Progressive Caucus" other then another terminology for Marxists ideologues and more wealth sharing……. stop being naive and start getting others educated in fact read the 5,000 year leap and get a better education……we are already sliding down the slippery slope we have no more "mananas" to wait upon…….

    28. Gary Feuerberg, Gait says:

      The analysis is good except for one thing: We were in the worse recession since the Great Depression. President Obama had to take these temporary spending measures to stimulate the economy and get the banks loaning again. Obama and his economic team have no liking for deficit spending like this and have only done it because of the emergency conditions. If nothing were done, like President Hoover, it would have taken much longer to recover. The analysis is unfair and simplistic because we were not in normal economic circumstances. Most economists agree with the above. It is not how much debt we incur but what we get back for that debt, roughly what Joe Stiglitz said. If it grows the economy and reduces unemployment, it is a good temporary measure.

    29. A. B.Curtiss says:

      I'm concerned about something hidden that I don't hear anyone talking about that concerns credit default swaps, after hearing yesterday's Glenn Beck show, that the credit default swaps that AIG was selling were betting on COUNTRIES failing not just mortgages.

      Could it be that credit default swaps were invented for the express purpose of ultimately bankrupting the US and other wealthy countries as they try to save each other like dominoes? To effect the final re-destribution of power and wealth that the progressives have been working on the last fifty years. ?

      I was trying to think who could be amassing a hidden army that might enforce such a global governance once it was put in place and it hit me that it could be an amalgen of globalized workers unions.

      Is the US going to have to make good on the some 40+ TRILLION credit default swaps betting on the Fall on Greece, Spain, etc. This is more than all the gnp in the whole world, isn't it?

      If the US has to make good on these because AIG or other US entities or banks issuing these credit default swaps fails, then will some global governance, like the IMF in concert with the Chicago Climate Exchange which is now a global entity to manage cap and trade credits,(11 trillion enterprise according to its head) to be soon enforced not by an ineffective UN but by a conglomerate of made up the soon to be globalized amalgem of all workers unions like SEIU, ACORN, etc and simply take us over the US like Greece because we are busted?

      Although we will have our regular Congress, state governments, etc., they will have to do what the global governance says. Or am I paranoid? I don't think Glenn Beck has any idea of the amount of money involved in credit default swaps. Does anybody else?

    30. JFBeck says:

      I think the Obama Administration now realizes that if the House and Senate switch to the Republicans / Tea Party reps, that he and many in Congress will face multiple charges of impeachment for high crimes against this country and it citizens.

      To think Nixon left the office and Clinton both were either threatened with and left the office or as in Clinton were impeached for lying….he will most certainly be brought up for trial in 2011 and be convicted. Obama will not serve out his full ONE term.

      How about that Mr. Jarvis. I see you have little to say any more on this site except foolish slogans.

      There will be no more functional Dem party left come Nov 2. Just the radical few. It is in the wind…..true hope and change is a few short months away.

      I just hate straight faced liers.

      Is it not sad to see that we have no more free press in this country. Thank God for FOX NEWS.!!!!!

    31. Ben C. Ann Arbor, MI says:

      Gary – the "Worst Recession since the Great Depression" is not true. The prior recession in the seventies was worse with inflation off the charts. I know, I lived it. Yes, return on investment is the key question. We have a new parking lot on the corner of Plymouth Rd and US 23. But what is it worth and who will buy it? The problem with the government is that it does not create wealth (except for a few who line their pockets with our money). So all of the "borrowed" money from taxpayers really cannot help the economy in the long run because it merely creates the illusion of prosperity. Only the creation of wealth (tangible assets with value) will rescue the economy. The Federal Governement cannot do this. Private enetrprise can. The Federal Government is succeeding in killing the Golden Goose.

    32. KLIMAX Baltimore MD. says:

      I agree with your views on how to stop the USA from becoming a welfare state but with the Democrats in power from NObama on down we don't have a snow balls chance in hell of it happening !! If Amnesty passes OUR welfare costs will go through the roof because most (90%) of the illegals will not be required to pay taxes due to their earning potential which is below the threshold of tax liability !! With Obamacare it is the same scenario, most of the 20+ Million illegals will receive credits which will pay for their health care coverage !! This craziness must stop or we will become a Third World Country after OUR economy collapses or the Civil War will start !!!

    33. bigdave ocala fl says:

      Does anyone at HERITAGE notice that this country is slipping quickly into a socialist state ? We are being CONTROLLED by an overtly, right out in the open fascist administration, which is adding to itself daily with the addition of so many leftist radicals, communists as czars, and nobody with any practical business sense except for UNION people and they don't count. A GIANT CANCER IS GROWING, aided and abetted by the NATIONAL NEWS MEDIA and HOLLYWOOD!! Imagine their ultimate sorrow and dismay when they suddenly realialize they destroyed their own country. IN one fell swoop we go from THE GREATEST GENERATION to THE WORST GENERATION…we thought we were being nice and gave it all away. At this present time we are the sheep with the lion on its back, we are still running and struggling. Will we shake off the lion? Or will the lion sink his fangs into our neck thereby paralyzing us ?…and eating us. Your time to get involved is NOW.

    34. Matthew C , Santa Ba says:

      Obama practices deception with everything he says and does . This country has been duped beyond belief and DEPENDS on all Progressive Liberals being voted OUT in November to stifle Obamas delusional goals and then dumping him in 2012. If you aren't outraged and scared senseless you are NOT paying attention !

    35. Earl, QUEENS, NY says:

      You ask: “Can We Avoid Becoming Europe?” YES!! Of course we can!! That is – if Americans wise up this year and in 2012, and beyond. These election cycles are critical, and our only hope of reversing the big mistakes made in 2006 and 2008!! WAKE UP AMERICA!!

    36. Pingback: » Daily Dose – September 22, 2010

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