Wednesday, October 22, 2008

Republican Fiscal Irresponsibility

Major Factor in the Fiscal Crisis: Republican Fiscal Irresponsibility
by Bernie W.

The unprecedented massive U.S. national debt, trade deficits, capital outflow and wealth that transferred to other countries, and redistribution of wealth from poor and middle class to the ultra-rich are the direct result of Republican policies (re: documentation below). Here are the facts:

  1. At the time of recently announced major fiscal bailouts, the outstanding U.S. Public Debt was $ 10.2 trillion, which is $33,300 per citizen.
  2. 100% of this debt was responsibility of 3 administrations: Reagan, Bush I, and Bush II.
  3. The national debt is increasing by $3.0 billion per day.
  4. Adding unfunded Medicaid, Social Security, Medicare, and similar obligations for the current population, this figure rises to a total of $59.1 trillion, or $516,348 per household.[6] These trust fund surpluses have been spent by the Bush Administrations and now represent unfunded liabilities [8].
  5. Additionally, losses from the falling value of subprime mortgage assets may reach $400 billion worldwide, Deutsche Bank AG analysts said. (Bloomberg) Subprime mortgages totaled $600 billion in 2006, accounting for about one-fifth of the U.S. home loan market[7]. Unsecured risk insurance by agencies involved in packaging risky investments added large amounts to the losses. Credit card debt is on its all time high. The Federal Reserve reported that revolving consumer credit has risen 7.4% from the same period last year. Outstanding credit card debt hit $937.5 billion. AMERICAN credit card debt is growing at the fastest rate in years, a fact that may signal coming trouble for the banks that issue them. . . The annual growth rate has now been over 7 percent for three months running, the first such stretch since 2001. In late January of 2008, Bank of America executives said credit card delinquencies in California, Florida, Arizona, and Nevada — states with high foreclosure rates—increased five times as fast as in other states. Average debt on credit accounts and fixed-payment accounts such as auto loans climbed to $16,600, up from $15,500 last April, according to the credit reporting agency Experian. Credit card companies have responded by raising interest rates on struggling customers, causing additional difficulties for such consumers. [9]
  6. Additionally, the 2007 U.S. trade deficit was over $739 billion and the debt is rapidly accumulating.
  7. The major factor in U.S. trade deficits is fuel imports; the U.S. is 70% dependent on oil imports, plus large amounts for natural gas and coal. The debt and deficits are a major drain on the value of the dollar, and result in a massive transfer of U.S. wealth to other countries and economic decline.
  8. The annual trade deficit is 35% larger than total Social Security spending, 50% larger than total defense spending, and 250% higher than Medicare spending.
  9. Since 1952, the international reserve position of the U.S. has fallen 95%, from 50% of the world total to 2.4%.
  10. The U.S. manufacturing base has declined 60%, while import ratios increased by a factor of 5.
  11. There has been a huge transfer of wealth from the middle class and the poor to the ultra-rich; with increased gap between rich and poor, and increasing inequities and joblessness.
  12. In both cities and suburbs where overall poverty rates rose from 1999 to 2005, child poverty rates rose faster. The income of the top 1% in income increased 14%, while that of the lower 90% declined.
Sources:
(1) http://www.brillig.com/debt_clock/
(2) http://zfacts.com/p/480.html
(3) summary: www.flcv.com/natdebt.html
(4) www.brookings.edu/reports/2006/12poverty_berube.aspx
(5) http://www.iht.com/articles/2007/03/29/business/income.4.php
(6) http://en.wikipedia.org/wiki/United_States_public_debt
(7) http://en.wikipedia.org/wiki/Subprime_lending
(8) www.flcv.com/TFhist.html
(9) http://bigpicture.typepad.com/comments/2008/01/consumer-debt-s.html

The policies that led to current situation are the same Republican fiscal policies were responsible in all 3 administrations--->
  • huge tax breaks to the rich and political supporters,
  • huge loans from social security and similar trust funds,
  • huge military spending increases,
  • huge fiscal bailout due to lax regulation and mismanagement,
  • huge cuts to programs affecting the poor, and
  • irresponsible failure to address energy dependency.
John Shimkus follows the failed policies of his boss in the White House. It is another example of his destructive tenure in congress. The people of IL-19 would have a lot better quality of life giving John his much-deserved pink slip.

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