With Super Tuesday behind us, the would-be front-runner ought to pull a surprise move and just drop attack ads against party rivals.
Going positive with a message to save the very programs that are supported by the base of Democrat Party—by taking aggressive steps to balance government revenues and outlays and reengineer a high-growth economy—would be a surprise reversal and get peoples’ attention.
It’s time to put President Obama on the defensive by reminding voters that the nearly $6 trillion being added to the national debt by the end of his first term equals the debt accumulated in the first 225 years of the country’s history.
Despite the S & P downgrade and warnings from the other rating agencies, Obama’s recent budget—which adds another $6.7 trillion in deficits and debt over the next 10 years—makes it obvious that he just doesn’t get it.
Leadership requires speaking directly to the American people about what’s required to avoid national insolvency. The government is now borrowing 40 cents of every dollar it spends, which equates to borrowing nearly $4 billion a day.
Washington’s continuous binge of borrowing to finance its deficits and debt is like putting mortgage payments on a credit card. As the Greeks have learned, there is no good end to the national compounding of debt.
Deficit spending financed by debt and the printing of money cannot be sustained. It will trigger significantly higher inflation or a collapse of the dollar.
In either case, continuing the status quo would be hardest on the very people the Democrats claim to represent—the middle and lower class.
They have the most need for a safety net because of their smaller base of savings and investments. And they are precisely the ones wiped out by inflation or a collapse in the dollar, which is all but inevitable staying on the present course.
Outside Washington, there is a palpable sense that the U.S. economy is rigged and in a precarious state. Republicans should reclaim the moral high ground by being honest and showing the courage to deal with this crisis.
The U.S. economy is at a tipping point, and absent fundamental reform, we face a permanent downward spiral, which leads to a collapse of the very social welfare programs that Obama and the Democrats claim to champion.
There is no more kicking the can. As Margaret Thatcher once said about an advanced welfare state, “the problem… is that sooner or later you run out of other people’s money.” Without reform, Social Security and Medicare will go the way of all Ponzi schemes—they will collapse.
In addition, the Republican front-runner ought to take a cue from Ron Paul. First, reclaim the good name of the free market by declaring war on crony capitalism–ending subsidies, tax loopholes and special deals.
Second, demand an audit and reform of the Federal Reserve, which has become Washington’s handmaiden in monetizing debt and facilitating deficit spending with abnormally low interest rates.
Just a few years ago, it was unthinkable that the Federal Reserve could consider setting the cost of money at zero percent for an extended period of time. Say what you will about Paul. He is a modern day Paul Revere.
If one-percent money for one year under Greenspan set the stage for the housing bubble that collapsed and caused such havoc, it follows that Bernanke’s zero-percent money for five years carries much more risk.
The mother of all bubbles, is now lurking in the world’s largest asset class—U.S. Treasury bonds. The fact that the U.S. economy no longer has any buffer or insurance plan shows a dereliction of leadership.
The cost of financing the U.S. debt for the last 100 years has averaged about 5.25% annually. With the Fed’s manipulation of interest rates, the cost of the nation’s debt is now at an all-time low of 2.24%.
At the same time, U.S. debt is the largest relative to GDP it has ever been in peacetime. Even if we are lucky enough to escape high inflation or a collapse, interest rates will normalize and rise.
Absent substantial reform, the cost of that normalization will absorb more of the budget and crowd out essential functions like defense.
History shows that presidential leadership is an indispensable factor in getting the federal budget under control. Obama has been AWOL and the U.S. is now at its most significant crossroads since the Civil War.
The would-be Republican front-runner should remember the best way to win in politics is the same as it is in sports. Maintain a positive attitude, take control of the ball and stay on the offensive.
Scott S. Powell is a senior fellow at the Discovery Institute. David Lowry is a retired commercial real estate developer and a former elected official in San Diego County.