Americanly Yours

This past weekend, President Obama announced that he wanted to cut the deficit in half by the end of his first term in 2013.  You would think that this would make a deficit hawk like me happy.  It would–if it werent so misleading.

President Obama says that he wants to cut the $1,300,000,000,000 [$1.3 trillion] deficit that he inherited from President Bush down to a deficit of $533,000,000,000 [$533 billion] by 2013.  While this seems like a tough goal that will cut spending, this will actually result in increased spending.  The reason for this is simple:  the present massive deficit is an aberration from the normal, including hundreds of billions of dollars in spending that was supposed to be one time spending.  For example, included in the $1,300,000,000,000 [$1.3 trillion] deficit is the $700,000,000,000 [$700 billion] spent on the bank bailout, the additional billions spent on the bailouts of Bear Stearns and AIG, and last years stimulus plan that sent most Americans a $600 check.

In fact 2008’s deficit was $438,000,000,000 [$438 billion] a massive number, but a number that is dwarfed by the $1,300,000,000,000 [$1.3 trillion] deficit that is to be expected in 2009.  The vast majority of this money was supposed to be for one time things.  In fact, without adding the increased spending from the “one time items,” the deficit for 2009 looks a lot like the deficit for 2008.

President Obama’s 2013 budget deficit figure still represents an increase of over 21% from 2008’s number.  This “cut” looks more like an increase to me.

And Mr. Obama’s own numbers still admit that he will have a deficit of over $1,000,000,000,000 [$1 trillion in both 2010 and 2011].  No numbers were given by his office for 2012’s predictions, but lets give him the benefit of the doubt and assume that 2012’s deficit equals 2013’s deficit of $533,000,000,000 [$533 billion].  This means an increase in the national debt of at least $3,000,000,000,000 [$3 trillion]–equal to $10,000 per American.  I think the numbers will be much higher.

More on that later.

Americanly Yours,

Phred Barnet

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When I was young, I read the children’s book If You Give A Mouse A Cookie. You can find the book here, but the book starts off like this: “If you give a mouse a cookie, He’s going to ask for a glass of milk. When you give him the milk, he’ll probably ask you for a straw…” The mouse keeps on asking for more and more, using each previous request as the basis for why he should get another favor.

With people saying things like “Well, we bailed out AIG, it isn’t fair for us to not bail out GM,” I have been thinking about this book a lot lately. People have been using flawed logic by saying that because we bailed out one failing company, we ought to bail out the next failing company. It was wrong for us to bailout Bear Stearns, AIG, Citigroup, or any of the hundreds of other businesses that the government has bailed out and taken an ownership stake in. Just because we have committed several wrongs doesn’t mean that we need to abandon what is right and continue doing wrong. Think about someone who is on a diet, but splurges once and eats a piece of cake in a moment of weakness. Should that person then eat a cookie, a cheeseburger, and a plate of delicious Chicken Wings because they have already fallen off the wagon, or should they admit they made a mistake and return to their diet?

Our government made a huge mistake in bailing out Bear Stearns. This led to the government being asked to bail out more and more companies. Using the flawed logic that I described above, the government bailed out more and more companies, not wanting to be “unfair” to any company or industry. In doing so, our President and Congress were unfair to the American people who are to be saddled with the large debts created by the costs of the bailouts which we do not support.

It might not be as good of a children’s book as If You Give A Mouse A Cookie, but here is an excerpt from my new book entitled If You Give Bear Stearns A Bailout:

If you bailout Bear Stearns, they will ask you to bailout AIG. If you bailout AIG, they are going to ask you to bailout the rest of the financial industry. If you bailout the financial industry, they are going to ask you to bailout the auto industry. If you bailout the auto industry, they will ask you to bailout the airlines…

We should have told that “mouse” no.

Americanly Yours,

Phred Barnet