Pay now or pay later
As I write this, Mitt Romney has amassed enough delegates to be declared the Republican nominee for president. While there is happiness in the Republican world, I am not rejoicing. There is no doubt that conservatives and Republicans see Romney as the fiscal and social anti-Obama. I don’t see any light at the end of this long and dark tunnel.
I realize I risk being tagged with the toilet-bowl viewpoint again but I ask you to bear with my reasoning process for a moment
The two scenarios we shall deal with are Obama wins and Romney loses or Romney wins and Obama loses.
In the first prospect, Obama redoubles his efforts to create a socialist utopia and taxes, borrows and spends us into the North American version of the collapsing European Union. However, in this disaster there will be no United States of America-financed International Monetary Fund to bail us out. The most optimistic financial gurus tell us that we face economic Armageddon; in three years the pessimistic ones give us only six months.
And why are they predicting these dire happenings?
The dollar has slipped from the world trading currency and is being replaced by the Chinese Yuan.
We borrow 40 cents of every dollar we spend. And a portion of that borrowing is debt service on the forty cents previously borrowed.
GDP has dropped to a 1.5 percent growth rate.
Baby Boomers are retiring at a fast clip and expect their Social Security to be there for them. The only problem with that picture is that there is no “lockbox” full of interest bearing funds to pay them. Three American workers are now needed to cover each recipient while more than 2 million workers are unemployed.
Our current administration seems to be blind or abysmally ignorant of these facts. This observation is borne out by the press releases that tout the “summer of recovery,” two million jobs created and other equally absurd pronouncements while extending unemployment benefits to 99 weeks. OK, we must accept the fact that Obama will continue allegiance to his Marxist ideology despite the castle tumbling about his ears. There is no doubt that this will foment financial calamity and social unrest when the government can no longer provide the entitlements 50 percent of the population has come to depend upon. The question is when, not if.
But what about Romney? Is his election the silver bullet to circumvent that lurking Armageddon? How would he approach the scary prospect outlined above? He has promised to reform entitlements, reduce federal spending, grant Obamacare waivers to all 50 states and then work with Congress to repeal the law. Mitt wants to rollback regulations that strangle economic growth and reduce taxes across the board.
One major step is to reduce the corporate tax rate to 25 percent and repeal the “death tax.” Romney’s strategy is to loosen the constraints on business, reduce entitlements in order to save them, reduce government spending, and by reducing the amount of taxes it will lubricate the wheels of commerce and increase the GDP from around 1 percent to the previous average of 5 percent. The historic average of government spending to GDP has ranged from 18 percent to 24 percent. The 24 percent was wartime spending. Mitt has set a goal of 20 percent, a reduction from the 24.3 percent of 2011. As should be obvious from this outline, a program of this magnitude will require some dislocations in budgets. While Mitt’s plan is not “austere,” it does require us to make changes.
My reservations are not a result of disagreement with the need or the plan, but rather from the possible reaction of the people who are currently living off the government dole. At last count that amounted to approximately 50 percent of the population. We have seen the reaction of the Greeks, French and Italians when faced with austerity measures. It seems to matter not whether those measures are needed to save their country from bankruptcy and total collapse. What is paramount in their minds is the disruption in their money flow. They don’t care or even consider that the gravy train will end in zero payments and disaster. Are we facing the same riots and civil disorders?
With Romney, you pay now; with Obama, you pay later!
Larry Tradlener lives down McElmo Canyon.